iiii 


I 


■ 


CURRENT  SOCIAL  AND 
INDUSTRIAL  FORCES 


CURRENT  SOCIAL  and 
INDUSTRIAL  FORCES 

Edited  hy  LIONEL  D.  EDIE 

Associate  Professor  of  History  and  Politics 

Colgate  University 

INTRODUCTION  BY  JAMES  HARVEY  ROBINSON 


BONI    AND    LIVERIGHT 

Publishers         New    York 


Copyright,  1920, 
BONI  &  LIVERIGHT,  Inc. 


Printed  in  the  United  States  of  America 


Hh\5 


PREFACE 

Writing  in  ''Socialism  and  the  Great  State,"  Mr.  H.  G.  Wells 
makes  the  following  observation:  "Now  opposed  to  the  Conserva- 
tors are  all  those  who  do  not  regard  contemporary  humanity  as  a 
final  thing  nor  the  Normal  Social  Life  as  the  inevitable  basis  of 
human  continuity  .  .  .  they  look  for  new  ways  of  living  and  new 
methods  of  human  association  with  a  certain  adventurous  hopeful- 
ness." To  the  latter  class  belong  for  the  most  part  the  thinkers  whose 
writings  make  up  this  book.  Unrest  and  disturbance  are  so  wide- 
spread and  insistent  that  it  seems  appropriate  to  bring  together  a 
selection  of  writings  by  a  number  of  men  who  are  striving  to  pro- 
mote the  ideas  and  forces  that  make  for  improvement.  This  effort 
to  bring  a  wide  variety  of  liberal  minds  to  bear  on  the  social  and 
industrial  problem  is  the  chief  distinguishing  feature  of  the  book. 

Not  all  of  the  authors  of  the  selections  are  equally  liberal  in 
their  viewpoints.  It  will  be  noticed  that  some  liberals  are  in 
thorough  disagreement  with  others,  often  on  the  most  fundamental 
issues.  Some  sources  will  perhaps  be  classed  as  radical  and  ex- 
tremist; these  are  inserted  on  the  presumption  that,  inasmuch  as 
there  is  to-day  a  radical  philosophy  and  extremist  movement,  it  is 
to  the  general  advantage  to  know  what  it  means,  whither  it  leads, 
and  what  power  it  commands.  Some  will  obviously  be  termed  con- 
servative or  reactionary;  these  are  inserted  either  to  draw  a  more 
accurate  estimate  by  presenting  both  sides  of  an  issue  or  to  present 
certain  facts  which  enter  into  the  foundations  of  liberal  conclusions 
or  to  suggest  the  power  of  the  opposition  with  which  liberalism  must 
contend. 

This  guiding  motive,  obviously,  is  thoroughly  different  from  an 
intention  to  make  up  a  propagandist  compilation.  The  aim  is  to 
present  the  case  of  those  who  believe  in  betterment.  Their  organ- 
ized strength,  their  platforms  and  policies,  their  social  and  industrial 
philosophies,  their  plans  of  action,  all  require  estimate  and  descrip- 
tion. If  the  forces  and  ideas  and  ideals  which  underlie  current  rest- 
lessness, disturbance  and  fear  can  be  brought  down  to  words,  defined 
and  described  in  a  manysided  way,  then  the  vital  purpose  which 
suggested  the  book  will  have  been  faithfully  followed. 

This  involves,  among  other  things,  that  the  choice  of  material 
be  guided  by  a  recognition  of  the  social  consequences  of  established 


3'7l!905 


vi  PREFACE 

economic  methods.  The  economic  system  of  the  present  day  re- 
sults in  an  economic  problem  largely  in  so  far  as  it  adds  to  or  de- 
tracts from  social  well-being  and  satisfaction.  Economics  and  in- 
dustry abound  with  human  issues  and  the  problems  of  disturbance 
and  change  emerge  largely  from  the  interrelations  of  social  and  in- 
dustrial forces. 

It  is  hoped  that  business  and  professional  men  will  find  this 
group  of  selections  serviceable  as  a  kind  of  entering  wedge  and  cen- 
ter of  exploration  in  this  field  of  thought.  For  university  students, 
the  book  is  intended  as  a  text-book  guide  and  rallying  point  for 
extended  investigation  of  current  social  and  industrial  forces.  The 
volume  endeavors  to  integrate  and  organize  some  of  the  best  thought 
on  the  subject.  The  full  books  and  articles  from  which  extracts  have 
been  drawn  offer  a  rich  fund  of  collateral  reading. 

The  plan  of  the  book  grew  out  of  the  editor's  need  for  a  text- 
book in  courses  on  Current  Historical  Forces  at  Colgate  University. 
These  courses  were  created  at  the  initiative  of  President  Elmer  Bur- 
ritt  Bryan  in  the  desire  to  acquaint  university  men  with  some  phases 
of  history  in  the  making.  Whatever  value  the  volume  may  have  is 
attributable  to  the  authors  whose  thoughts  enter  into  the  selections. 
Special  appreciation  is  due  to  Professor  James  Harvey  Robinson 
who,  in  addition  to  writing  the  introduction,  gave  valuable  criticism 
of  the  undertaking.  The  courtesy  of  permission  to  publish  copy- 
righted material  is  deeply  appreciated  and  is  recognized  individually 
in  connection  with  each  selection  printed. 

The  construction  of  the  book  has  continually  benefited  by  the 
suggestions  and  criticisms  of  my  wife  and  has  been  carried  on  with 
her  constant  cooperation. 

Lionel  D.  Edie, 
Associate  Professor  of  History  and  Politics,  Colgate  University. 


CONTENTS 

PAGB 

Preface        v 

Introduction  by  James  Harvey  Robinson xiii 


I.    Forces  of  Disturbance 

(a)  Walter  E.Weyl:    The  End  of  the  War       . 

(b)  Basil  Manly:    American  Industrial  Unrest 

(c)  Arthur  Henderson :    Aims  of  Labor 

(d)  J.  A.  Hobson:    Democracy  after  the  War   . 

(e)  H.  M.  Kallen:    Structure  of  Lasting  Peace 

(f)  F.  J.  Teggart:    The  Processes  of  History    . 


II.    Potentialities  of  Production 
Sabotage 

(a)  Thorstein  Veblen:    The  Nature  and  Uses  of  Sabotage     .       15 

(b)  Survey  of  4400  Industrial  Establishments,  National  Asso- 

sociation  of  Manufacturers 24 

(c)  Meyer  Bloomfield:    Management  and  Men      ....       25 

(d)  United  States  Federal  Commission  on  Industrial  Relations      26 

(e)  W.  I.  King:    Wealth  and  Income  of  the  People  of  the 

United  States 27 

Unorganized  Production 

(a)  David  Friday:    Production  after  the  War 29 

(b)  Charles  W.  Wood :    The  Great  Change 32 

(c)  Sidney  Webb:  The  Restoration  of  Trade  Union  Conditions  36 

Organization  of  Production 

(a)  Walter  E.  Weyl:    The  End  of  the  War 38 

(b)  OrdwayTead:    The  People's  Part  in  Peace      ....  38 

(c)  J.  A.  Hobson:    Democracy  after  the  War 44 


viii  CONTENTS 

PAGB 

III.    The  Price  System 

1.  Tactics  of  the  Price  System 

(a)  Wesley  C.  Mitchell:    Business  Cycles 49 

(b)  A.  C.  Miller:    Price  Adjustment 52 

(c)  W.  H.  Hamilton:    The  Price  System  and  Social  Policy    .       53 

2.  Capitalization  and  Value 

(a)  Thorstein  Veblen:    The  Theory  of  Business  Enterprise   .       69 

(b)  W.  C.  Mitchell:     Business  Cycles 71 

(c)  Report   of   Commissioner  of    Corporations  on  Tobacco 

Industry 75 

(d)  Report  of  Federal  Trade  Commission  on  Meat  Packing 

Industry 76 

3.  Profits 

(a)    Federal  Trade  Commission  on  Profiteering 77 


IV.    The  Direction  or  Industry 

1.  The  Wage  System  and  Industrial  Power 

(a)  G.  D.  H.  Cole:    Self  Government  in  Industry       ...       91 

(b)  Judge  E.  H.  Gary:    Commencement  Address  ....       94 

(c)  Final    Report    of    Federal    Commission    on    Industrial 

Relations 95 

2.  Absentee  Ownership 

(a)  Report  of  President's  Mediation  Commission,  Felix  Frank- 

furter, Secretary  and  Counsel 97 

(b)  Samuel  Untermyer:     Address  before  American  Bankers 

Convention 97 

(c)  Final  Report  Federal  Commission  on  Industrial  Relations, 

191S 98 

(d)  Thorstein  Veblen:  Theory  of  Business  Enlerprise       .      .      loi 

3.  Concentration  and  State  Interference 

(a)  Harold  J.  Laski:     Authority  in  the  Modern  State.      .      .     1C54 

(b)  Federal  Trade   Commission:  Meat  Packing  Industries     .     115 


CONTENTS  ix 

PAGB 

(c)  Basil  Manly:    Labor's  Share  of  the  Social  Product       .     .  ii6 

(d)  British  Report  on  Commercial  and  Industrial  Policy  after 

the  War 117 

(e)  Herbert  Croly:    The  Promise  of  American  Life     .     .     .  118 

(f)  Louis  D.  Brandeis:    Other  People's  Money  and  How  the 

Bankers  Use  It 122 


V.    The  Funds  of  Reorgaistization 

Surplus  Product 

(a)  J.  A.  Hobson:    Democracy  after  the  War 133 

(b)  J.  A.  Hobson:    The  Industrial  System 133 

(c)  W.  I.  King:    Wealth  and  Income  of  the  People  of  the 

United  States 141 

(d)  Walter  E.  Weyl:    The  New  Democracy 142 

(e)  Walter  E.  Weyl:    The  End  of  the  War 147 

Social  Minimum 

(a)  Alvin  Johnson:    To  Save  CanitaHsm 149 

(b)  Frank  P.  Walsh:    Living  and  Subsistence  Wage     .     .     .     150 

(c)  Wm.  F.  Ogburn:    Measurement  of  the  Cost  of  Living  and 

Wages 151 

(d)  Judge    Samuel    Alschuler:    Award    in    Packing    House 

Industries 153 

(e)  Felix  Frankfurter:    Address  on  Labor  Standards  .     .     .     154 

National  Credit  and  Taxation 

(a)  Irving  Fisher:    Making  Posterity  Pay 156 

(b)  J.  Laurence  LaughUn:    The  Credit  of  Nations      .     .     .     157 

(c)  T.S.Adams:    The  Excess  Profits  Tax 163 

(d)  Resolution  on  Taxation  of  the  National  Association  of 

Manufacturers 165 

(e)  J.  A.  Hobson:     The  Industrial  System 165 

Labor  and  the  New  Social  Order 

(a)     Report  on  Reconstruction  Executive  Committee  British 

Labor  Party 167 


X  CONTENTS 

FAGB 

(b)  Meyer  Bloomfield:    Management  and  Men      ....     187 

(c)  Final  Report  on  Industrial  Councils,  Great  Britain     .     .     188 

(d)  Report  of  U.  S.  Employers'  Industrial  Commission  to 

Great  Britain 190 

(e)  Ordway  Tead:    Criticism  of  Whitley  Councils     .     .     .     192 

VI.    Thk  Power  and  Policy  of  Organized  Labor 

1.  Direct  Action 

(a)  Bertrand  Russell:    Democracy  and  Direct  Action     .     .     199 

(b)  J.G.Brooks:    American  Syndicalism  and  the  I.  W.  W.     .     205 

(c)  Final    Report    of    Federal    Commission    on    Industrial 

Relations,  191 5 207 

(d)  Paul  U.  Kellogg  and  Arthur  Gleason:    British  Labor  and 

the  War 208 

2.  Trade  Unions 

(a)  Robert  F.  Hoxie:    Trade  Unionism  in  the  United  States    211 

(b)  Monthly  Labor  Review,  U.  S.  Bureau  of  Labor,  Strikes 

and  Lockouts,  1916-1918 214 

(c)  Labor  clauses  adopted  by  the  Peace  Conference,  April 

28th,  1919 217 

(d)  National  War  Labor  Board  Principles 218 

(e)  Proceedings  of  A.  F.  of  L.  Convention,  19 19     .     .     .     .     220 

3.  Labor  and  the  Bench 

(a)  Resolution  of  the  A.  F.  of  L.  on  the  Powers  of  the 

Judiciary 223 

(b)  Robert  F.  Hoxie:    Trade  Unionism  in  the  United  States    224 

(c)  Henry  R,  Seager:    Bias  of  the  Courts,  Testimony  Federal 

Commission  on  Industrial  Relations 227 

(d)  Thomas  Reed  Powell:    Collective  Bargaining  before  the 

Supreme  Court 228 

VII.    Proposed  Plans  of  Action 
I.    Reform 

(a)  Graham  Wallas:    The  Great  Society 243 

(b)  Helen  Marot:    Why  Reform  is  Futile 250 


CONTENTS  xi 

PAGB 

(c)  Robert  F.  Hoxie:    Trade  Unionism  in  the  United  States      256 

(d)  Herbert  Croly:    The  Promise  of  American  Life     .     .     .     257 

(e)  Harold  Steams:    Neglected  Causes  of  Fatigue       .     .     .     260 

2.  Syndicalism 

(a)  Louis  Levine:    Syndicalism  in  France 264 

(b)  J.  G.  Brooks:    American  Syndicalism  and  the  I.  W.  W.  .  277 

(c)  Bertrand  Russell:    Roads  to  Freedom 283 

(d)  Graham  Wallas:    The  Great  Society 283 

3.  Socialism 

(a)  Emil  Vandervelde:    Socialism  versus  The  State    .     .     .     286 

(b)  Will  Durant:    The  Future  of  American  SociaUsm       .     .     291 

(c)  James  MacKaye:    Americanized  Socialism       ....     296 

4.  The  Soviet 

(a)  Ra)Tnond  Robins:    The  Meaning  of  the  Soviet     .     .     .  299 

(b)  A.  J.  Sack:    Anti-Soviet 3°° 

(c)  S.  Nucrteva:    Pro-Soviet 301 

(d)  The  New  RepubUc  Editorial:    Tactics  of  the  Soviet   .     .  301 

5.  Industrial  Democracy 

(a)  Frank  P.  Walsh:    The  Responsibility  of  the  Workingman    305 

(b)  Woodrow  Wilson:    Message  to  Congress,  May  20,  19 19    307 

(c)  President's   Mediation   Commission,   Felix   Frankfurter, 

Secretary  and  Counsel 

(d)  Herbert  Croly:    Progressive  Democracy     .     . 

(e)  A.  F.  of  L.  Reconstruction  Program       .     .     . 

(f)  Robert  W.  Bruere:    Immediate  Requirements 

(g)  A.  E.  Zimmem:    Nationality  and  Government 
(h)  Wm.  Leavitt  Stoddard:    Shop  Committee  .     . 
(i)  Louis  D.  Brandeis:    Right  to  Share  Responsibility 
(j)  Meyer  Bloomfield:    Management  and  Men 
(k)  Felix  Frankfurter:    Address  on  Labor  Standards 


309 
310 
312 
314 
315 
317 
321 
322 
324 


Vin.    Industrial  Doctrines  in  Defense  of  the  Status  Quo 


I.    The  Economic  Man 

(a)  Walter  Lippmann :    Drift  and  Mastery 329 

(b)  Woodrow  Wilson:    Message  to  Congress 332 


xii  CONTENTS 


PAGE 


2.  Fyrtnership  of  Capital  and  Labor 

(a)  John  D.  Rockefeller,  Jr.:    Industrial  Creed      .     .     .     .335 

(b)  President  of  National  Association  of  Manufacturers  on 

Employment  Relations 336 

(c)  Judge  E.  H.  Gary:    Workmen  as  Investors      ....  345 

(d)  W.  I.  King:    Wealth  and  Income  of  the  People  of  the 

United  States 345 

(e)  The  U.  S.  Chamber  of  Commerce  Committee:    Principles 

of  Industrial  Relations 346 

(f)  Otto  H.  Kahn:    IndividuaUsm 348 

3.  Rising  to  the  Top 

(a)  Woodrow  WUson:    The  New  Freedom        350 

(b)  Alvin  Johnson:    The  Laborer's  Turn 352 

(c)  Russell  H.  Conwell:    Acres  of  Diamonds 356 

4.  Repression 

(a)  Norman  Angell:    The  British  Revolution  and  American 

Democracy 360 

(b)  Graham  Wallas:    The  Great  Society 362 

IX.    The  Possibilities  of  Social  Service 

(a)  Walter  Lippmann:    Drift  and  Mastery 367 

(b)  Herbert  Croly:    Progressive  Democracy 371 

(c)  H.  G.  Wells:    Discovery  of  the  Future 373 

H.  G.  Wells:  Social  Forces  in  England  and  America      .  375 

(d)  John  Dewey:    A  New  Social  Science 380 

(e)  James  Harvey  Robinson:    The  New  History    ....  382 

(f)  Bertrand  Russell:    Roads  to  Freedom 388 


INTRODUCTION 

Never  before  in  the  history  of  man  has  the  discussion  of  public 
affairs  been  as  general  and  intense  as  it  is  to-day.  Even  before  the 
War  came  to  stir  all  classes  to  wonder  about  the  strange  doings  of 
nations  the  changes  wrought  by  modern  invention  and  new  forms  of 
industrial  and  commercial  activity  had  forced  many  minds  to  grope 
toward  new  conceptions  of  man's  possibilities  and  new  ways  of  meeting 
ancient  and  novel  predicaments.  Inasmuch  as  we  are  all  prone  to 
take  sides,  and  few  there  be  who  can  so  far  suspend  judgment  as 
merely  to  contemplate  and  analyze  vital  human  problems  without 
either  defending  or  reprobating  current  ideals,  aims,  and  institutions, 
it  comes  about  that  thoughtful  persons  are  popularly  classified  as 
Conservatives  and  Radicals.  A  very  little  observation  makes  it 
clear  that  the  breeds  are  rarely  pure,  since  almost  all  conservatives 
claim  to  be  true  progressives,  and  no  radical  really  ever  advocates 
upsetting  everything.  But  the  Conservative  is  temperamentally 
apprehensive  lest  change  be  over-precipitate  and  produce  a  general 
loss  of  hard  wrought  human  achievement,  while  the  radical  is  pre- 
occupied with  the  danger  lest  disaster  result  from  lethargy  and  stupid 
adherence  to  outworn  routine.  In  general  the  conservative  is  afraid 
of  the  Radical,  while  the  Radical  is  contemptuous  of  the  Conservative, 
who  seems  to  him  to  be  mistaking  mere  sloth  and  blindness  and 
assured  personal  comfort  and  complacency  for  eternal  principles. 

In  addition  to  the  conservatives,  as  commonly  conceived,  who  find 
their  cherished  mission  in  defending  existing  ideas  and  institutions, 
and  the  radicals,  who  have  a  rooted  suspicion  of  the  past  and  advocate 
some  more  or  less  definite  program  of  reform,  there  is  a  small  class 
of  thinkers  who  understand  one  another  pretty  well,  but  who  are 
sources  of  irritation  to  most  of  their  fellow  men  of  pronounced  views. 
There  is  no  name  for  this  small  class,  who  scarcely  rise  to  the  rank 
of  belligerents.  They  seem  to  stand  for  nothing  in  particular,  but 
are  content  to  look  on,  and  study  the  history  of  human  traditions, 
the  workings  of  man's  desires  and  the  influence  of  his  ever-altering 
environment  mainly  with  a  view  of  understanding  them.  They 
take  the  Conservative  for  granted,  like  death  or  gravitation.  He 
has  been  on  hand  to  defend  and  "rationalize"  what  was  familiar  to 
him,  from  the  time  speculation  about  human  affairs  first  began.  He  is 
the  epiphenomenon  of  the  vested  interests,  religious,  social,  economic, 


xiv  INTRODUCTION 

intellectual  and  artistic  which  inevitably  make  up  a  great  part  of 
human  life.  The  Radical  on  the  other  hand  is  by  no  means  so 
primitive.  Only  criticism  can  produce  him  and  hopes  of  a  better 
future.  He  was  a  rare  bird  before  the  seventeenth  century.  We 
recognize  his  few  conspicuous  forerunners  in  Iknahton,  Xenophanes, 
Lucretius,  Roger  Bacon  and  Pierre  Dubois.  When  the  idea  of  human 
progress  emerged  clearly  with  Francis  Bacon  the  way  was  opened 
for  those  who  plead  with  men  in  the  name  of  the  future  possibilities 
rather  than  past  standards.  But  our  onlookers  perceive  that  the 
Radical  often  fights  his  new  battle  in  the  old  way;  and  tends  to 
substitute  new  dogmas  and  creeds  for  the  ancient  ones.  When  a 
socialist  proclaims  that  Capitalism  is  responsible  for  war  it  seems 
no  sounder  a  conclusion  than  that  of  the  Conservative  who  maintains 
that  mankind  having  always  drunk  alcohol  will  always  continue 
to  do  so. 

From  the  writings  of  this  third  and  nameless  class  Professor  Edie 
has  elected  to  make  a  considerable  number  of  his  selections — a  class 
sometimes  called  "academic,"  and  sometimes  taxed,  with  what  a 
distinguished  member  of  the  class,  Mr.  Veblen,  has  so  well  called 
"truculent  quietism."  Their  frank  exposure  of  existing  evils  offends 
the  Conservative  and  their  reluctance  to  join  the  fray  alienates  the 
militant  Radical.  But  they  should,  at  their  best,  be  playing  an  essen- 
tial role  in  social  reconstruction.  They  are  our  teachers,  whose 
detachment  ought  to  recommend  them  to  all  who  are  anxious  for 
new  knowledge  and  new  intellectual  stimulus.  No  one  except  a 
confessed  obscurantist  can  find  fault  with  their  ideal  of  promoting 
scientific  research  and  speculation  in  regard  to  public  affairs.  The 
only  legitimate  fear  would  be  that  they  are  too  aloof  from  the  actual 
current  of  events  to  estimate  conditions  correctly.  But  of  late 
writers  of  this  class  have  certainly  been  taking  a  far  more  eager 
interest  in  actual  conditions  than  they  formerly  did,  and  are  decreas- 
ingly  open  to  the  charge  of  relying  merely  on  books  and  cloistral 
meditation  for  their  ideas. 

Professor  Edie  has,  however,  by  no  means  confined  himself  to  this 
class,  for  he  has  included  the  opinions  of  many  notable  practitioners 
who  have  actively  participated  in  and  guided  large  enterprises  and 
public  investigations.  These  have  had  first  hand  experience  of  the 
puzzling  intricacy  of  human  affairs  and  conflicting  interests.  When 
such  men  retain  a  broad  interest  in  general  betterment  their  special 
knowledge  and  experience  give  their  findings  peculiar  weight. 

When  we  read  a  book  or  article  we  are  commonly  struck  by  certain 
pregnant  passages  in  which  the  writer  summarizes  with  particular 
felicity  his  main  contentions  or  reveals  the  attitude  of  mind  which 
has  resulted  from  his  studies.  It  is  such  passages  from  a  very  wide 
range  of  writers  which  Professor  Edie  has  culled  out  and  ingeniously 


INTRODUCTION  xv 

ordered  under  pertinent  headings.  His  anthology  forms  a  really 
imposing  stock-taking  of  current  speculation  upon  pressing  economic 
quandaries.  It  does  not  attempt  to  prove  anything  or  defend  any- 
thing, except  the  necessity  of  considering  the  pass  in  which  humanity 
finds  itself  with  the  hope  that  with  new  knowledge  and  fuller  under- 
standing our  policies  of  reform  may  be  more  prompt  and  less  bimgling 
and  expensive  than  they  might  otherwise  be. 

James  Harvey  Robinson 

New  School  for  Social  Research 


L    FORCES  OF  DISTURBANCE 


CURRENT  SOCIAL  AND  INDUSTRIAL 

FORCES 

I.    FORCES  OF  DISTURBANCE 

Walter  E.  Weyl:  The  End  of  the  War  * 

The  final  war  for  democracy  will  begin  after  the  war.  It  will  be 
a  wider  conflict  than  that  which  now  rages  and  the  alignment  will  be 
by  classes  and  interests  rather  than  by  nations.  It  will  be  a  war 
which  will  be  waged  until  separate  interests  within  each  nation  are 
completely  extinguished. 

BaMl  Manly:    American  Industrial  Unrest  t 

We  are  about  to  enter  a  period  of  the  most  acute  industrial  unrest 
and  the  most  bitter  industrial  controversy  that  the  American  nation 
has  ever  known.  Unless  effective  and  radical  steps  are  taken  to  bring 
about  a  better  understanding  between  labor  and  capital  and  to 
establish  an  equitable  basis  for  orderly  industrial  progress  we  are 
certain  to  see  within  the  next  year  strikes  and  mass  movements  of 
labor  beside  which  all  previous  American  strikes  will  pale  into  in- 
significance. Since  the  signing  of  the  armistice  we  have  had  a  large 
number  of  small  strikes  and  a  few  great  spectacular  ones — the  Seattle 
strike,  the  New  York  harbor  strike,  the  Lawrence  strike,  the  Toledo 
strike  and  a  number  of  others  of  lesser  consequence.  But  these  have 
been  so  limited  in  comparison  with  the  labor  upheavals  in  other 
countries — in  England,  in  Germany,  in  Canada,  in  Australia,  and 
in  the  Argentine — that  there  has  been  a  public  disposition  to  regard 
the  industrial  situation  with  complacency  and  to  assume  that,  having 
passed  through  the  first  part  of  the  period  of  transition  without 

*  Copyright,  The   Macmillan   Company.     Reprinted  by  permission. 

t  Extracts  from  an  address.  Reprinted  from  the  Nation  of  June  14, 
1919,  by  permission  of  the  Nation,  of  Mr.  Manly  and  of  the  National 
Conference  of  Social  Work,  reproduced  from  the  Proceedings  of  the 
Forty-sixth  National  Conference  of  Social  Work,  at  Atlantic  City,  1919. 

I 


2  CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

serious  industrial  disturbances,  we  were  about  to  enter  an  era  of 
industrial  peace.  .  .  . 

Those  who  regard  the  American  industrial  situation  with  compla- 
cency ignore  both  the  psychology  of  the  workers  and  the  compelling 
facts.  The  workers  of  the  allied  world  have  been  told  that  they 
were  engaged  in  a  war  for  democracy;  that  out  of  the  ruins  of  the 
war  would  arise  a  new  and  more  beautiful  world.  They  are  asking 
now,  "Where  is  that  democracy  for  which  we  fought?  When  are 
we  to  enter  into  this  new  world  with  its  greater  regard  for  the  rights 
of  the  common  man?"  They  see  no  change  for  the  better,  but  they 
find  themselves  in  conditions  in  many  respects  worse  than  those 
against  which  they  protested  before  we  entered  the  war.  The  masses 
of  the  people  are  being  rapidly  disillusioned,  and  when  the  people 
lose  their  illusions  there  is  danger  ahead.  They  have  seen  the  prices 
of  nearly  every  commodity,  including  rents,  advance  so  far  beyond 
the  increases  which  they  have  secured  in  their  weekly  wages  since 
the  beginning  of  the  war  that  they  are  now  actually  able  to  buy  less 
of  the  necessities  of  life  than  before  the  war  began.  There  are  ex- 
ceptions it  is  true,  where  the  percentage  of  wage  increase  has  been 
greater,  but,  if  you  will  examine  these  cases  of  unusual  increases 
as  I  have  examined  them,  you  will  find  that  in  a  majority  of  in- 
stances those  increases  have  come  to  groups  of  workers  who  are  ad- 
mitted, even  by  their  employers,  to  have  been  underpaid  during  the 
pre-war  period.  .  .  . 

But  it  is  not  merely  that  the  cost  of  living  is  high  and  beyond  the 
capacity  of  the  wage-earner's  pocketbook.  This  might  be  endured 
with  some  degree  of  patience  and  fortitude  if  the  people  who  toiled 
believed  that  no  one  was  profiting  from  their  necessities,  and  that 
all  were  bearing  the  burden  alike.  But  they  have  seen  with  their 
own  eyes  and  heard  with  their  own  ears  of  the  unconscionable  profi- 
teering of  American  corporations  during  the  war,  and  they  know  that 
that  same  profiteering  is  now  continuing  unabated.  I  have  just 
completed  a  study  of  the  earnings  of  eighty-two  representative 
American  corporations,  a  record  of  whose  profits  is  available  for  each 
year  from  191 1  through  1918.  This  is  not  a  list  selected  either  be- 
cause the  profits  were  large  or  because  the  profits  were  small.  It  is 
a  list  of  all  the  corporations  whose  earnings  covering  this  entire 
period  were  available  to  me.  A  compilation  of  these  figures  shows 
that  the  same  eighty-two  corporations  which,  in  the  pre-war  years, 
had  an  average  net  income  of  $325,000,000,  had  net  incomes  in  191 6 
amounting  to  more  than  $1,000,000,000,  in  1917  of  $975,000,000, 
and  in  1918  of  $736,000,000.  This  is  after  the  deduction  of  every 
dollar  of  State  and  Federal  taxes,  and  of  every  conceivable  charge 


FORCES  OF  DISTURBANCE  3 

which  these  companies  could  devise  for  reducing  and  concealing  their 
apparent  profits. 

I  am  convinced  as  a  result  of  my  study  that  the  actual  profits  even 
after  the  payment  of  taxes  in  191 7  and  19 18  were  just  as  great  as  in 
19 1 6,  the  difference  being  accounted  for  by  the  fact  that  in  191 7 
and  19 1 8  these  corporations  set  up  all  kinds  of  excessive  reserves  for 
depreciation,  amortization  and  other  unspecified  and  fanciful  con- 
tingencies, for  the  purpose  of  evading  taxation  and  concealing  their 
excessive  earnings  from  the  public  and  the  tax  collector.  But  even 
taking  the  figures  as  they  stand,  we  find  that  these  eighty-two  corpo- 
rations earned,  net,  three  dollars  in  191 6  and  191 7,  and  over  two 
dollars  in  19 18,  for  every  dollar  which  they  earned  in  the  pre-war 
period.  This  is  profiteering  with  a  vengeance,  and  the  profiteers  may 
well  tremble  lest  the  people  avenge  themselves  for  this  shameless 
exploitation  during  a  period  of  the  nation's  greatest  necessity.  .  .  . 

Wise  men  know  also  that  the  labor  movement  has  greatly  in- 
creased its  strength  in  recent  years.  At  least  two  million  men  have 
been  added  to  the  ranks  of  organized  labor  in  America  during  the 
war.  A  million  have  been  organized  on  the  railways  alone,  and  more 
than  a  million  have  been  added  to  the  unions  affiliated  with  the 
American  Federation  of  Labor  in  other  branches  of  industry,  Amer- 
ican labor  is  more  conscious  than  ever  before  of  its  power  and  of 
its  rights.  It  will  demand  the  abolition  of  age-old  injustices.  Labor 
has  been  in  the  harness  for  untold  centuries.  The  harness  has 
become  heavy  and  galling,  but  labor  does  not  now  ask  that  the 
harness  be  lightened  or  that  the  share  of  oats  and  hay  be  enlarged. 
Labor  now  demands  the  right  to  climb  into  the  driver's  seat  and 
help  control  the  machinery  which  draws  the  lumbering  chariot  of 
modern  industry. 

Arthur  Henderson:  The  Aims  of  Labor*  (pp.  67-71; 

88) 

Revolution  is  a  word  of  evil  omen.  It  calls  up  a  vision  of  barri- 
cades in  the  street  and  blood  in  the  gutters.  No  responsible  per- 
son, however  determined  he  or  she  may  be  to  effect  a  complete  trans- 
formation of  society,  can  contemplate  such  a  possibility  without 
horror.  It  is  impossible  to  say  what  the  future  holds,  but  many  of 
us  believe  that  mankind  is  so  weary  of  violence  and  bloodshed  that 
if  the  coming  social  revolution  necessarily  involved  armed  insurrec- 
tion it  would  find  no  general  sanction.  To  the  British  people  in 
particular  the  prospect  of  a  period  of  convulsive  effort  of  this  char- 

*  Reprinted   by  permission   of    B.   W.   Huebsch. 


4         CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

acter  is  wholly  without  appeal.  Revolution  in  this  sense  is  alien  to 
the  British  character.  Only  in  the  last  resort  and  as  a  final  des- 
perate expedient  have  the  people  of  this  country  consented  to  employ 
force  to  attain  their  ends.  There  have  been  times,  of  course,  when 
the  active  opposition  or  dead  inertia  of  the  ruling  classes  have  not 
been  overcome  until  the  people  have  shown  that  they  were  bent 
on  obtaining  their  ends  even  at  the  cost  of  bloodshed.  These  occa- 
sions have  not  been  numerous.  They  have  been  more  in  the  nature 
of  spontaneous  popular  uprisings  than  of  deliberately  planned  in- 
surrections. The  British  people  have  no  aptitude  for  conspiracy. 
They  are  capable  of  vigorous  action,  of  persistent  and  steady  agita- 
tion year  in  and  year  out,  of  stubborn  and  resolute  pressure  against 
which  nothing  can  stand;  they  have  their  moods  of  anger  which 
may  find  expression  in  sporadic  revolts:  but  they  do  not  organize 
revolutions  or  plot  the  seizure  of  power  by  a  sudden  coup  d'etat. 
The  growth  of  political  democracy  among  us  has  been  marked  by 
few  violent  crises.  Successive  extensions  of  the  franchise  have  been 
won  mainly  by  agitations  of  a  peaceful  kind,  accompanied  in  only  a 
few  cases  by  rioting,  and  organized  revolution  in  the  continental 
sense,  for  political  or  social  ends,  has  been  exceedingly  rare  in  our 
history. 

It  would  be  idle,  however,  to  deny  that  the  temper  of  democracy 
after  the  war  will  not  be  so  placable  as  it  has  hitherto  been. 
Whether  we  like  it  or  fear  it,  we  have  to  recognize  that  in  the 
course  of  the  last  three  and  a  half  years  people  have  become  habitu- 
ated to  thoughts  of  violence.  They  have  seen  force  employed  on 
an  unprecedented  scale  as  an  instrument  of  policy.  Unless  we  are 
very  careful  these  ideas  will  rule  the  thoughts  of  masses  of  the 
people  in  the  post-war  period  of  reconstruction.  The  idea  that  by 
forceful  methods  the  organized  democracy  can  find  a  short  cut  to 
the  attainment  of  its  aims  will  have  its  attractions  for  men  of 
unstable  temperament,  impatient  of  the  inevitable  setbacks  which 
we  are  bound  to  encounter  if  we  work  along  constitutional  lines. 
Let  that  idea  stand  unchallenged  by  the  leaders  of  democracy,  and 
we  shall  be  faced  with  graver  perils  than  any  that  have  con- 
fronted us  in  past  times.  Never  before  have  we  had  such  vast 
numbers  of  the  population  skilled  in  the  use  of  arms,  disciplined, 
inured  to  danger,  accustomed  to  act  together  under  orders.  When 
the  war  ends  this  country  and  every  other  will  be  flooded  with 
hardy  veterans  of  the  great  campaigns.  Among  them  will  be  thou- 
sands of  men  who  have  exercised  authority  over  their  fellows  in 
actual  warfare,  and  who  will  be  capable  of  assuming  leadership 
again  if  insurrectionary  movements  come  into  existence.  We  may 
be  warned  by  a  perception  of  these  facts  that  if  barricades  are 


FORCES  OF  DISTURBANCE  $ 

indeed  likely  to  be  erected  in  our  streets  they  will  be  manned  by 
men  who  have  learned  how  to  fight  and  not  by  ill-disciplined  mobs 
unversed  in  the  use  of  modern  weapons,  likely  to  be  easily  over- 
come by  trained  troops.  Revolution,  if  revolution  is  indeed  to 
be  forced  upon  democracy,  will  be  veritable  civil  war. 

The  prospect  of  social  convulsions  on  this  scale  is  enough  to 
appall  the  stoutest  heart.  Yet  this  is  the  alternative  that  unmistak- 
ably confronts  us,  if  we  turn  aside  from  the  path  of  ordered  social 
change  by  constitutional  methods.  ...  By  peaceable  methods,  or 
by  direct  assault,  society  is  going  to  be  brought  under  democratic 
control.  And  the  choice  of  method  does  not  primarily  rest  with 
democracy:  it  lies  rather  with  the  classes  who  own  the  machinery 
of  production  and  control  the  machinery  of  the  State  to  decide 
whether  necessary  changes  are  to  be  peaceably  introduced  on  the 
basis  of  willing  cooperation,  or  resisted  to  the  last  ditch.  .  .  . 

The  outstanding  fact  of  world  politics  at  the  present  time — and 
when  peace  comes  this  fact  will  be  made  still  more  clear — is  that 
a  great  tide  of  revolutionary  feeling  is  rising  in  every  country. 
Everywhere  the  peoples  are  becoming  conscious  of  power.  They 
are  beginning  to  sit  in  judgment  upon  their  rulers. 

J.  A.  Hohson:  Democracy  After  the  War*  (pp.  53; 

210-212) 

We  have  already  recognized  that  these  "rights"  of  property  com- 
prise many  "wrongs,"  and  that  in  every  advanced  industrial  nation 
more  and  more  vigorous  popular  movements  are  directed  to  the 
redress  of  these  wrongs.  In  this  country,  as  in  others,  these  move- 
ments of  political,  social  and  economic  reform  are  recognized  by 
the  ruling  and  possessing  classes  as  attacks  on  property.  The 
classes  everywhere  prepare  defenses.  The  nature  of  these  defenses 
is  determined  by  the  attack.  Now,  in  most  countries  the  attack  upon 
improperty  is  an  integral'  factor  in  every  form  of  the  democratic 
movement.  Reforms  in  land  tenure  and  in  housing,  in  taxation 
and  rating,  most  factory  and  other  industrial  laws,  much  hygienic, 
temperance  and  moral  legislation,  involve  frontal  attacks  on  some 
form  of  improperty.  Other  popular  demands  for  education,  recrea- 
tion, insurance,  pensions,  etc.,  requiring  large  outlays  of  public 
money,  are  resented  as  burdens  on  property.  The  labor  move- 
ment, alike  on  its  economic  and  its  political  side,  is  chiefly  directed 
to  the  redress  of  grievances  or  the  assertion  of  claims  obnoxious  to 
the  interests  of   the  propertied   classes.     Even   those  movements 

*  Copyright,  The   Macmillan  Company.     Reprinted  by  permission. 


6  CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

not  directly  economic  in  their  aim  and  method,  such  as  those  for 
extension  of  the  franchise  and  other  improvements  of  electoral 
and  governmental  machinery,  are  largely  actuated  by  the  express 
or  implied  desire  to  use  for  economic  purposes  the  enlarged  powers 
of  popular  self-government.  In  all  these  ways  the  democratic  move- 
ment is  hostile  to  improperty.  .  .  . 

A  powerful  fund  of  genuine  democratic  feeling  will  be  liberated 
with  the  peace.  The  temper  of  the  peoples,  released  from  the  tension 
of  war,  will  be  irritable  and  suspicious,  and  this  irritability  and 
suspicion,  copiously  fed  by  stories  of  governmental  incompetence 
and  capitalistic  greed  in  the  conduct  of  the  war,  and  sharpened  by 
personal  sacrifices  and  privations,  will  be  dangerous  for  governments. 
The  contrast  between  the  liberties  for  which  they  were  fighting  and 
the  new  restraints  to  which  they  are  subjected  will  be  disconcert- 
ing and  instructive.  Every  trade  and  every  locality  will  have 
its  special  difficulties  and  grievances.  Economic  and  financial  trou- 
bles will  everywhere  break  up  the  artificial  unity  of  war-time,  and 
the  grave  political  cleavages  that  must  display  themselves  when 
the  issues  of  taxation,  permanent  conscription,  State  ownership 
of  industries,  imperial  federation  and  international  relations  open 
out,  will,  by  breaking  the  old  molds  of  party,  set  free  large  volumes 
of  political  energy  for  new  experiments  in  political  and  economic 
reconstruction.  Many  of  the  old  taboos  of  class  prestige,  sex  dis- 
tinction, sanctity  of  property,  and  settled  modes  of  living  and 
thinking,  will  be  broken  for  large  sections  of  the  population.  The 
returning  armies  will  carry  back  into  their  homes  and  industries 
powerful  reactions  against  militarism  and  will  not  be  disposed  to 
take  lying  down  the  attempt  of  the  reactionists  to  incorporate  it  as 
a  fixed  institution  in  the  State.  In  every  country  of  Europe 
popular  discontent  will  be  seething  and  suspicious  against  rulers 
gathering.  In  other  words,  all  the  factors  of  violent  or  pacific 
revolution  will  exist  in  conscious  activity.  The  raw  material  and 
energy  of  a  great  democratic  movement  will  be  at  hand,  provided 
that  thought,  organization  and  direction  can  make  them  effective. 
Hitherto  for  our  working,  as  indeed  for  our  other  classes,  clear  think- 
ing has  been  an  intolerable  burden.  But  there  is  no  congenital 
racial  incapacity  for  thinking,  if  the  emergency  is  adequate,  and, 
for  the  workers  at  any  rate,  it  should  be  adequate.  For  they 
will  be  confronted  with  the  now  plain  alternative  of  a  firmly  en- 
trenched class  supremacy  in  politics,  industry  and  every  other  social 
institution,  and  the  necessity  of  popular  organization  for  the  control 
of  the  government  in  order  that  they  may  recover  their  lost  liberties 
and  establish  and  extend  the  principles  of  political  and  social  self, 
government. 


FORCES  OF  DISTURBANCE 


H.  M,  Kallen:  The  Structure  of  Lasting  Peace  *  (pp. 

116-117) 

Organizing  lasting  peace  is  only  making  deeper,  wider  and  more 
thoroughgoing  application  of  the  irreducible  principles  which  are 
the  trite  and  living  foundations  of  any  and  all  community  life. 
They  have  been  known  and  repeated  since  the  days  of  Isaiah  and 
of  Plato.  They  are  basic  assumptions  of  this  book;  only  the  lan- 
guage that  expresses  them  has  altered,  not  they.  In  toto,  they  come 
to  some  such  thing  as  this:  Men  live  in  families,  herds  or  groups 
of  varying  inheritance,  character  and  organization.  To  survive  and 
to  grow,  they  stand  in  need  of  food,  clothing,  shelter  and  freedom 
for  the  free  play  of  their  spontaneous  energies.  These  they  obtain 
by  mastering  the  non-human  natural  environment  in  which  they 
live,  by  tilling  and  mining  the  soil,  harnessing  the  winds  and  the 
waters,  domesticating  and  hunting  the  animals,  learning  to  know 
and  to  control  the  hidden  laws  and  forces  of  nature.  The  tools 
whereby  they  win  to  such  competence  as  is  possible  to  them  are 
the  religions,  sciences  and  arts  which  taken  together  compose  the 
institutions  of  civilizations.  Now  what  they  cannot  in  fact  master 
or  in  fact  use,  they  seek  to  own.  Ownership  consists,  in  the  vast 
majority  of  cases,  in  a  restraint  upon  your  fellow  from  using  what 
you  cannot  use  yourself.  Thus,  no  matter  where  or  what  the  group 
m.ay  be  or  how  it  starts;  within  it,  the  tools  and  materials  of  life 
are  or  become  in  a  short  time  the  private  possession  of  a  few  peoples 
and  of  a  few  individuals  among  those  peoples.  Within  nations  this 
situation  constitutes  the  injustices  and  inequalities  of  classes  and 
masses,  rich  and  poor,  patricians  and  plebs.  Between  nations  it 
constitutes  the  injustices  of  empires  and  hegemonies. 

A  very  extensive  phase  of  history  then  becomes  the  attempt  of 
the  expropriated  to  recover  a  control  over  the  necessities  of  Hfe,  a 
chance  for  freedom,  and  a  hope  for  happiness. 

Frederick  J.  Teggart:  The  Processes  of  History^ 
(pp.  148-52,  156-62) 

Investigation  in  different  fields  of  the  study  of  man  has  led  many 
contemporary   scholars — Petrie,   Haddon,    Rivers,   Mackinder,   Ho- 

♦  Reprinted  by  permission  of  Marshall  Jones  Co.,  Boston,  Mass. 
t  Reprinted  by  permission  of  The  Yale  University  Press,  New  Haven, 
Conn. 


8         CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

garth,  Myres,  Temple,  Balfour,  Smith,  Hall,  Jastrow,  Sollas,  to 
mention  but  a  few — to  observe  that  human  advancement  has  fol- 
lowed upon  the  collision  of  different  groups.  Pieced  together,  the 
conclusions  arrived  at  so  far  may  be  summarized  in  the  statement 
that  definite  advance  has  taken  place  in  the  past  when  a  group, 
forced  from  its  habitat,  ultimately  by  a  change  in  climate,  has  been 
brought  into  collision  with  another  differing  from  it  considerably  in 
culture,  and  has  remained  upon  the  invaded  territory.  It  is  prob- 
able that  this  statement  as  a  whole  would  not  receive  unquestioned 
support  from  all  those  who  have  contributed  to  it  in  part;  on  the 
other  hand,  it  is  to  be  understood  that  the  palseontologist,  geog- 
rapher, anthropologist,  archaeologist,  or  historian,  as  the  case  may 
be,  has  arrived  at  his  conclusion,  one  may  say,  incidentally,  and  has 
not  turned  aside  from  the  matter  in  hand  to  give  this  generalization 
independent  consideration.  Thus  in  any  given  instance  it  might 
be  sufficient  to  say  that  ''the  dispossession  by  a  newcomer  of  a  race 
already  in  occupation  of  the  soil  has  marked  an  upward  step  in  the 
intellectual  progress  of  mankind,"  without  pursuing  the  question 
further.  As  a  consequence,  the  conclusions,  even  in  the  consoli- 
dated form  here  given,  have  not  been  carried  to  a  point  at  which 
they  might  constitute  an  hypothesis  explanatory  of  human  ad- 
vancement. 

Indeed,  it  is  only  when  we  take  a  further  step,  and  come  to  ask 
how  conceivably  usurpation  of  territory,  or  war,  or  admixture  of 
peoples  could  affect  intellectual  advancement,  that  the  underlying 
prol3lem  is  brought  to  light.  It  cannot  well  be  assumed  that  either 
the  intermarriage  of  different  stocks  or  the  struggle  of  battle  will 
of  itself  bring  about  this  result;  and  while  it  is  said  that  "if  you 
would  change  a  man's  opinions — transplant  him,"  it  does  not  follow 
that  the  change  will  be  effected  by  the  scenery.  In  short,  the 
"change"  that  leads  to  advancement  is  mental.  What,  then,  is  of 
importance  to  notice  is  that  when  enforced  migration  is  followed  by 
collision,  and  this  by  the  alien  occupation  of  territory,  there  ensues 
as  a  result  of  the  conflict  the  breaking  down  or  subversion  of  the 
established  idea-systems  of  the  groups  involved  in  the  struggle.  The 
breakdown  of  the  old  and  unquestioned  system  of  ideas,  though  it 
may  be  felt  as  a  public  calamity  and  a  personal  loss,  accomplishes 
the  release  of  the  individual  mind  from  the  set  forms  in  which  it 
has  been  drilled,  and  leaves  men  opportunity  to  build  up  a  system 
for  themselves  anew.  This  new  idea-system  will  certainly  contain 
old  elements,  but  it  will  not  be  like  the  old,  for  the  consolidated 
group,  confronted  with  conflicting  bodies  of  knowledge,  of  obser- 
vances, and  of  interpretations,  will  experience  a  critical  awakening, 
and  open  wondering  eyes  upon  a  new  world.    Thus  it  is  not  the 


FORCES  OF  DISTURBANCE  9 

physical  contact  of  men  that  is  of  supreme  importance  in  human 
advancement,  but  the  overthrow  of  the  dominance  of  the  traditional 
system  in  which  the  individuals  composing  the  group  have  been 
trained,  and  which  they  have  unconditionally  accepted;  though  ad- 
vancement seems  rarely  to  have  been  possible,  in  the  past,  save 
when  diverse  groups  have  been  set  face  to  face  in  desperate  struggle. 

Here,  then,  is  a  process  which  differs  essentially  from  those  pre- 
viously described,  for  it  is  manifested  only  when  some  exterior  dis- 
turbance or  shock  has,  for  the  time  being,  weakened  or  overcome 
the  influence  or  effect  of  the  previously  described  processes;  when 
manifested,  however,  this  process  is  the  same  in  all  cases.  The 
hypothesis  required  may  now  be  stated  in  the  form  that  human 
advancement  follows  upon  the  mental  release,  of  the  members  of  a 
group  or  of  a  single  individual,  from  the  authority  of  an  established 
system  of  ideas.  This  release  has,  in  the  past,  been  occasioned 
through  the  breaking  down  of  previous  idea-systems  by  prolonged 
struggles  between  opposing  groups  which  have  been  brought  into 
conflict  as  a  result  of  the  involuntary  movements  of  peoples.  What 
follows  is  the  building  up  of  a  new  idea-sj^stem,  which  is  not  a  simple 
cumulation  of  the  knowledge  previously  accepted,  but  the  product 
of  critical  activity  stirred  by  the  perception  of  conflicting  elements 
in  the  opposed  idea-systems. 

In  reality,  there  is  nothing  abstruse  about  the  processes  involved, 
for,  primarily,  as  S.  A.  Cook  has  pointed  out,  we  hold  ideas  simply 
because  nothing  has  occurred  to  disturb  them;  the  fact  is,  in  the 
words  of  Sir  Oliver  Lodge,  that  unless  we  encounter  flaw  or  jar 
or  change,  nothing  in  us  responds.  So  Bateson,  seeking  for  an 
alternative  to  the  method  of  Darwin,  has  proposed  to  "consider  how 
far  we  can  get  by  the  process  of  removal  of  what  we  may  call 
'epistatic'  factors,  in  other  words  those  that  control,  mask,  or  sup- 
press underlying  powers  and  faculties,"  "I  have  confidence,"  he 
says  in  the  course  of  this  inquiry,  "that  the  artistic  gifts  of  man- 
kind will  prove  to  be  due  not  to  something  added  to  the  make-up 
of  an  ordinary  man,  but  to  the  absence  of  factors  which  in  the 
ordinary  person  inhibit  the  development  of  those  gifts.  They  are 
almost  beyond  doubt  to  be  looked  upon  as  releases  of  powers  nor- 
mally suppressed."  It  is,  however,  in  the  later  writings  of  William 
James  that  the  subject  receives  fullest  consideration.  Reviewing 
Herbert  Spencer's  Autobiography,  he  says,  "Mr.  Spencer  himself 
is  a  great  social  force.  The  effects  he  exerts  are  of  the  nature  of 
releases — his  words  pull  triggers  in  certain  kinds  of  brain."  "In 
biology,  psychology,  and  sociology,"  he  continues,  "the  forces  con- 
cerned are  almost  exclusively  forces  of  release."  Furthermore,  at 
this  point  one  might  well  incorporate  entire  his  remarkable  essay 


10       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

on  "The  Energies  of  Men."  In  this  he  points  out  that  "as  a  rule 
men  habitually  use  only  a  small  part  of  the  powers  which  they 
actually  possess  and  which  they  might  use  under  appropriate  con- 
ditions." "We  are  all,"  he  says,  "to  some  degree  oppressed,  unfree. 
We  don't  come  to  our  own.  It  is  there,  but  we  don't  get  at  it." 
The  inhibition  is  due  to  the  influence  of  convention,  and  he  re- 
marks that  "an  intellect  thus  tied  down  by  literality  and  decorum 
makes  on  one  the  same  sort  of  impression  that  an  able-bodied  man 
would  who  should  habituate  himself  to  do  his  work  with  only  one 
of  his  fingers,  locking  up  the  rest  of  his  organism  and  leaving  it 
unused."  To  what,  then,  he  asks,  do  men  owe  their  escape?  and 
to  what  are  improvements  due,  when  they  occur?  In  general  terms, 
he  says,  the  answer  is  plain:  "Excitements,  ideas,  and  efforts  are 
M'hat  carry  us  over  the  dam."  Ideas,  in  particular,  he  regards  as 
notable  stimuli  for  unlocking  what  would  otherwise  be  unused  reser- 
voirs of  individual  initiative  and  energy.  This  effectiveness  he  as- 
cribes to  the  fact,  first,  that  ideas  contradict  other  ideas  and  thus 
arouse  critical  activity,  and,  second,  that  the  new  ideas  which  emerge 
as  a  result  of  this  conflict  unify  us  on  a  new  plane  and  bring  to 
us  a  significant  enlargement  of  individual  power.  Thus,  in  complete 
unconsciousness  of  the  historical  aspect  of  the  subject,  James  has 
described,  from  the  point  of  view  of  the  individual,  what  proves  to 
be  the  essential  element  in  the  process  through  which  human  ad- 
vancement has  everywhere  been  made.  .  .  . 


Finally,  the  method  herein  described  brings  the  study  of  History 
into  direct  relation  with  the  problems  of  life.  I  have  indicated  that, 
throughout  the  past,  human  advancement  has,  to  a  marked  degree, 
been  dependent  upon  war.  From  this  circumstance,  many  investi- 
gators have  inferred  that  war  is,  in  itself,  a  blessing — however  greatly 
disguised.  We  may  see,  however,  that  this  judgment  is  based  upon 
observations  which  have  not  been  pressed  far  enough  to  elicit  a  scien- 
tific explanation.  War  has  been,  times  without  number,  the  ante- 
cedent of  advance,  but  in  other  cases,  such  as  the  introduction  of 
Buddhism  into  China,  the  same  result  has  followed  upon  the  ac- 
ceptance of  new  ideas  without  the  introductory  formality  of  bitter 
strife.  As  long,  indeed,  as  we  continue  to  hold  tenaciously  to  cus- 
tomary ideas  and  ways  of  doing  things,  so  long  must  we  live  in 
anticipation  of  the  conflict  which  this  persistence  must  inevitably 
induce. 

It  requires  no  lengthy  exposition  to  demonstrate  that  the  ideas 
which  lead  to  strife,  civil  or  international,  are  not  the  products  of 
the  highest  knowledge  available,  are  not  the  verified  results  of  scien- 


FORCES  OF  DISTURBANCE  ii 

tific  inquiry,  but  are  "opinions"  about  matters  which,  at  the  mo- 
ment, we  do  not  fully  understand.  Among  modern  peoples,  the 
most  important  of  these  opinions  are  concerned  with  the  ordering 
of  human  affairs;  and  in  this  area  all  our  "settlements"  of  the  prob- 
lems which  confront  us  must  continue  to  be  temporary  and  uncertain 
compromises  until  we  shall  have  come  to  apply  the  method  of  science 
in  their  solution.  Science  is  not  a  body  of  beliefs  and  opinions,  but 
is  a  way  or  method  of  dealing  with  problems.  It  has  been  said  by 
a  notable  contemporary  that  men  begin  the  search  for  truth  with 
fancy,  after  that  they  argue,  and  at  length  they  try  to  find  out. 
Scientific  method  is  the  term  we  use  for  the  orderly  and  systematic 
effort  to  find  out.  Hitherto,  the  most  serious  affairs  of  men  have 
been  decided  upon  the  basis  of  argumentation,  carried,  not  infre- 
quently, to  the  utmost  limits  of  destruction  and  death.  It  should 
be  possible  to  apply  in  this  domain  the  method  of  finding  out,  and 
it  has  been  my  hope  to  contribute,  in  however  tentative  a  manner, 
to  this  end. 


II.     POTENTIALITIES   OF  PRODUCTION 


I.    SABOTAGE 

Thor stein  Vehlen:  On  the  Nature  and  Uses  of 

Sabotage  * 

(pp.  341-346) 

The  word  [sabotage]  first  came  into  use  among  the  organized 
French  workmen,  the  members  of  certain  syndicats,  to  describe  their 
tactics  of  passive  resistance,  and  it  has  continued  to  be  associated 
with  the  strategy  of  these  French  workmen,  who  are  known  as  syndi- 
calists, and  witli  their  like-minded  running-mates  in  other  countries. 
But  the  tactics  of  these  syndicalists,  and  their  use  of  sabotage,  do 
not  differ,  except  in  detail,  from  the  tactics  of  other  workmen  else- 
where, or  from  the  similar  tactics  of  friction,  obstruction,  and  delay 
habitually  employed,  from  time  to  time,  by  both  employees  and 
em.ployers  to  enforce  an  argument  about  wages  and  prices.  There- 
fore, in  the  course  of  a  quarter-century  past,  the  word  has  quite 
unavoidably  taken  on  a  general  meaning  in  common  speech,  and  has 
been  extended  to  cover  all  such  peaceable  or  surreptitious  ma- 
neuvers of  delay,  obstruction,  friction,  and  defeat,  whether  employed 
by  the  workmen  to  enforce  their  claims,  or  by  the  employers  to  de- 
feat their  employees,  or  by  competitive  business  concerns  to  get  the 
better  of  their  business  rivals  or  to  secure  their  own  advantage. 

Such  maneuvers  of  restriction,  delay,  and  hindrance  have  a  large 
share  in  the  ordinary  conduct  of  business;  but  it  is  only  lately  that 
this  ordinary  line  of  business  strategy  has  come  to  be  recognized  as 
being  substantially  of  the  same  nature  as  the  ordinary  tactics  of  the 
syndicalists.  So  that  it  has  not  been  usual  until  the  last  few  years 
to  speak  of  maneuvers  of  this  kind  as  sabotage  when  they  are  em- 
ployed by  employers  and  other  business  concerns.  But  all  this 
strategy  of  delay,  restriction,  hindrance,  and  defeat  is  manifestly 
of  the  same  character,  and  should  conveniently  be  called  by  the 
same  name,  whether  it  is  carried  on  by  business  men  or  by  work- 
men; so  that  it  is  no  longer  unusual  now  to  find  workmen  speak- 
ing of  "capitalistic  sabotage"  as  freely  as  the  employers  and  the 
newspapers  speak  of  syndicalist  sabotage.  As  the  word  is  now 
used,  and  as  it  is  properly  used,  it  describes  a  certain  system  of 

*  Reprinted  by  permission  from  The  Dial  of  April  S,  1919. 

IS 


1 6       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

industrial  strategy  or  management,  whether  it  is  employed  by  one  or 
another.  What  it  describes  is  a  resort  to  peaceable  or  surreptitious 
restriction,  delay,  withdrawal,  or  obstruction. 

Sabotage  commonly  works  within  the  law,  although  it  may  often 
be  within  the  letter  rather  than  the  spirit  of  the  law.  It  is  used 
to  secure  some  special  advantage  or  preference,  usually  of  a  busi- 
nesslike sort.  It  commonly  has  to  do  with  something  in  the  nature 
of  a  vested  right,  which  one  or  another  of  the  parties  in  the  case 
aims  to  secure  or  defend,  or  to  defeat  or  diminish;  some  preferential 
right  or  special  advantage  in  respect  of  income  or  privilege,  some- 
thing in  the  way  of  a  vested  interest.  Workmen  have  resorted  to 
such  measures  to  secure  improved  conditions  of  v/ork,  or  increased 
wages,  or  shorter  hours,  or  to  maintain  their  habitual  standards,  to 
all  of  which  they  have  claimed  to  have  some  sort  of  a  vested  right. 
Any  strike  is  of  the  nature  of  sabotage,  of  course.  Indeed,  a  strike 
is  a  typical  species  of  sabotage.  That  strikes  have  not  been  spoken 
of  as  sabotage  is  due  to  the  accidental  fact  that  strikes  were  in  use 
before  this  word  came  into  use.  So  also,  of  course,  a  lockout  is  an- 
other typical  species  of  sabotage.  That  the  lockout  is  employed  by 
the  employers  against  the  employees  does  not  change  the  fact  that 
it  is  a  means  of  defending  a  vested  right  by  delay,  withdrawal,  de- 
feat, and  obstruction  of  the  work  to  be  done.  Lockouts  have  not 
usually  been  spoken  of  as  sabotage,  for  the  same  reason  that  holds 
true  in  the  case  of  strikes.  All  the  while  it  has  been  recognized  that 
strikes  and  lockouts  are  of  identically  the  same  character. 

All  this  does  not  imply  that  there  is  anything  discreditable  or 
immoral  about  this  habitual  use  of  strikes  and  lockouts.  They  are 
part  of  the  ordinary  conduct  of  industry  under  the  existing  system, 
and  necessarily  so.  So  long  as  the  system  remains  unchanged  these 
measures  are  a  necessary  and  legitimate  part  of  it.  By  virtue  of 
his  ownership  the  owner-employer  has  a  vested  right  to  do  as  he 
will  with  his  own  property,  to  deal  or  not  to  deal  with  any  person 
that  offers,  to  withhold  or  withdraw  any  part  or  all  of  his  industrial 
equipment  and  natural  resources  from  active  use  for  the  time  being, 
to  run  on  half  time  or  to  shut  down  his  plant  and  to  lock  out  all 
those  persons  for  whom  he  has  no  present  use  on  his  own  premises. 
There  is  no  question  that  the  lockout  is  altogether  a  legitimate  ma- 
neuver. It  may  even  be  meritorious,  and  it  is  frequently  considered 
to  be  meritorious  when  its  use  helps  to  maintain  sound  conditions  in 
business — that  is  to  say,  profitable  conditions,  as  frequently  happens. 
Such  is  the  view  of  the  substantial  citizens.  So  also  is  the  strike 
legitimate,  so  long  as  it  keeps  within  the  law;  and  it  may  at  times 
even  be  meritorious,  at  least  in  the  eyes  of  the  strikers.  It  is  to 
be  admitted  quite  broadly  that  both  of  these  typical  species  of 


POTENTIALITIES  OF  PRODUCTION  17 

sabotage  are  altogether  fair  and  honest  in  principle,  although  it  does 
not  therefore  follow  that  every  strike  or  every  lockout  is  necessarily 
fair  and  honest  in  its  working-out.  That  is  in  some  degree  a  question 
of  special  circumstances. 

Sabotage,  accordingly,  is  not  to  be  condemned  out  of  hand, 
simply  as  such.  There  are  many  measures  of  policy  and  manage- 
ment both  in  private  business  and  in  public  administration  which  are 
unmistakably  of  the  nature  of  sabotage  and  which  are  not 
only  considered  to  be  excusable,  but  are  deliberately  sanctioned 
by  statute  and  common  law  and  by  the  public  conscience.  Many 
such  measures  are  quite  of  the  essence  of  the  case  under  the  estab- 
lished system  of  law  and  order,  price  and  business,  and  are  faith- 
fully believed  to  be  indispensable  to  the  common  good.  It  should 
not  be  difficult  to  show  that  the  common  welfare  in  any  community 
which  is  organized  on  the  price  system  cannot  be  maintained  with- 
out a  salutary  use  of  sabotage — that  is  to  say,  such  habitual  re- 
course to  delay  and  obstruction  of  industry  and  such  restriction 
of  output  as  will  maintain  prices  at  a  reasonably  profitable  level  and 
so  guard  against  business  depression.  Indeed,  it  is  precisely  con- 
siderations of  this  nature  that  are  now  engaging  the  best  attention  of 
officials  and  business  men  in  their  endeavors  to  tide  over  a  threaten- 
ing depression  in  American  business  and  a  consequent  season  of 
hardship  for  all  those  persons  whose  main  dependence  is  free  income 
from  investments. 

Without  some  salutary  restraint  in  the  way  of  sabotage  on  the 
productive  use  of  the  available  industrial  plant  and  workmen,  it  is 
altogether  unlikely  that  prices  could  be  maintained  at  a  reasonably 
profitable  figure  for  any  appreciable  time.  A  businesslike  control 
of  the  rate  and  volume  of  output  is  indispensable  for  keeping  up 
a  profitable  market,  and  a  profitable  market  is  the  first  and  un- 
remitting condition  of  prosperity  in  any  community  whose  industry 
is  owned  and  managed  by  business  men.  And  the  ways  and  means 
of  this  necessary  control  of  the  output  of  industry  are  always  and 
necessarily  something  in  the  nature  of  sabotage — something  in  the 
way  of  retardation,  restriction,  withdrawal,  unemployment  of  plant 
and  workmen — whereby  production  is  kept  short  of  productive  ca- 
pacity. The  mechanical  industry  of  the  new  order  is  inordinately 
productive.  So  the  rate  and  volume  of  output  have  to  be  regulated 
Avith  a  view  to  what  the  traffic  will  bear — that  is  to  say,  what  will 
yield  the  largest  net  return  in  terms  of  price  to  the  business  men 
in  charge  of  the  country's  industrial  system.  Otherwise  there  will 
be  "overproduction,"  business  depression,  and  consequent  hard  time? 
all  round.  Overproduction  means  production  in  excess  of  what  the 
market  will  carry  off  at  a  sufficiently  profitable  price.    So  it  appears 


i8       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

that  the  continued  prosperity  of  the  country  from  day  to  day  hangs 
on  a  "conscientious  withdrawal  of  efficiency"  by  the  business  men 
who  control  the  country's  industrial  output.  They  control  it  all  for 
their  own  use,  of  course,  and  their  own  use  means  always  a  profit- 
able price. 

In  any  community  that  is  organized  on  the  price  system,  with 
investment  and  business  enterprise,  habitual  unemployment  of  the 
available  industrial  plant  and  workmen,  in  whole  or  in  part,  appears 
to  be  the  indispensable  condition  without  which  tolerable  condi- 
tions of  life  cannot  be  maintained.  That  is  to  say,  in  no  such 
community  can  the  industrial  system  be  allowed  to  work  at  full 
capacity  for  any  appreciable  interval  of  time,  on  pain  of  business 
stagnation  and  consequent  privation  for  all  classes  and  conditions 
of  men.  The  requirements  of  profitable  business  will  not  tolerate 
it.  So  the  rate  and  volume  of  output  must  be  adjusted  to  the  needs 
of  the  market,  not  to  the  working  capacity  of  the  available  resources, 
equipment  and  man  power,  nor  to  the  community's  need  of  con- 
sumable goods.  Therefore  there  must  always  be  a  certain  variable 
margin  of  unemployment  of  plant  and  man  power.  Rate  and  volume 
of  output  can,  of  course,  not  be  adjusted  by  exceeding  the  productive 
capacity  of  the  industrial  system.  So  it  has  to  be  regulated  by 
keeping  short  of  maximum  production  by  more  or  less,  as  the  con- 
dition of  the  market  may  require.  It  is  always  a  question  of  more 
or  less  unemployment  of  plant  and  man  power,  and  a  shrewd  moder- 
ation in  the  unemployment  of  these  available  resources,  a  "con- 
scientious withdrawal  of  efficiency,"  therefore,  is  the  beginning  of 
wisdom  in  all  sound  workday  business  enterprise  that  has  to  do  with 
industry. 

All  this  is  matter  of  course  and  notorious.  But  it  is  not  a  topic 
on  which  one  prefers  to  dwell.  Writers  and  speakers  who  dilate  on 
the  meritorious  exploits  of  the  nation's  business  men  will  not  com- 
monly allude  to  this  voluminous  running  administration  of  sabotage, 
this  conscientious  withdrawal  of  efficiency,  that  goes  into  their  ordi- 
nary day's  work.  One  prefers  to  dwell  on  those  exceptional,  sporadic, 
and  spectacular  episodes  in  business  where  business  men  have  now 
and  again  successfully  gone  out  of  the  safe  and  sane  highway  of 
conservative  business  enterprise  that  is  hedged  about  with  a  con- 
scientious withdrawal  of  efficiency,  and  have  endeavored  to  regulate 
the  output  by  increasing  the  productive  capacity  of  the  industrial 
system  at  one  point  or  another. 

But  after  all,  such  habitual  recourse  to  peaceable  or  surreptitious 
measures  of  restraint,  delay,  and  obstruction  in  the  ordinary  busi- 
nesslike management  of  industry  is  too  widely  known  and  too  well 
approved  to  call  for  much  exposition  or  illustration.     Yet,  as  one 


POTENTIALITIES  OF  PRODUCTION  19 

capital  illustration  of  the  scope  and  force  of  such  businesslike  with- 
drawal of  efficiency,  it  may  be  in  place  to  recall  that  all  the  civilized 
nations  are  just  now  undergoing  an  experiment  in  businesslike  sa- 
botage on  an  unexampled  scale  and  carried  out  with  unexampled 
effrontery.  All  these  nations  that  have  come  through  the  war, 
whether  as  belligerents  or  as  neutrals,  have  come  into  a  state  of 
more  or  less  pronounced  distress,  due  to  a  scarcity  of  the  common 
necessaries  of  life;  and  this  distress  falls,  of  course,  chiefly  on  the 
common  sort,  who  have  at  the  same  time  borne  the  chief  burden 
of  the  war  which  has  brought  them  to  this  state  of  distress.  The 
common  man  has  won  the  war  and  lost  his  livelihood.  This  need 
not  be  said  by  way  of  praise  or  blame.  As  it  stands  it  is,  broadly, 
an  objective  statement  of  fact,  which  may  need  some  slight  quali- 
fication, such  as  broad  statements  of  fact  will  commonly  need.  All 
these  nations  that  have  come  through  the  war,  and  more  particularly 
the  common  run  of  their  populations,  are  very  much  in  need  of  all 
sorts  of  supplies  for  daily  use,  both  for  immediate  consumption 
and  for  productive  use.  So  much  so  that  the  prevailing  state  of 
distress  rises  in  many  places  to  an  altogether  unwholesome  pitch  of 
privation,  for  want  of  the  necessary  food,  clothing,  and  fuel.  Yet 
in  all  these  countries  the  staple  industries  are  slowing  down.  There 
is  an  ever  increasing  withdrawal  of  efficiency.  The  industrial  plant 
is  increasingly  running  idle  or  half  idle,  running  increasingly  short 
of  its  productive  capacity.  Workmen  are  being  laid  off  and  an  in- 
creasing number  of  those  workmen  who  have  been  serving  in  the 
armies  are  going  idle  for  want  of  work,  at  the  same  time  that  the 
troops  which  are  no  longer  needed  in  the  service  are  being  demo- 
bilized as  slowly  as  popular  sentiment  v>"ill  tolerate,  apparently  for 
fear  that  the  number  of  unemployed  workmen  in  the  country  may 
presently  increase  to  such  proportions  as  to  bring  on  a  catastrophe. 
And  all  the  while  all  these  peoples  are  in  great  need  of  all  sorts 
of  goods  and  services  which  these  idle  plants  and  idle  workmen  are 
fit  to  produce.  But  for  reasons  of  business  expediency  it  is  im- 
possible to  let  these  idle  plants  and  idle  workmen  go  to  work — 
that  is  to  say  for  reasons  of  insufficient  profit  to  the  business  men 
interested,  or  in  other  words,  for  reasons  of  insufficient  income  to 
the  vested  interests  which  control  the  staple  industries  and  so  regu- 
late the  output  of  product.  The  traffic  will  not  bear  so  large  a 
production  of  goods  as  the  community  needs  for  current  consump- 
tion, because  it  is  considered  doubtful  whether  so  large  a  supply 
could  be  sold  at  prices  that  would  yield  a  reasonable  profit  on  the 
investment — or  rather  on  the  capitalization;  that  is  to  say,  it  is 
considered  doubtful  whether  an  increased  production,  such  as  to  em- 
ploy more  workmen  and  supply  the  goods  needed  by  the  community, 


20       CURRENT  SOCL^L  AND  INDUSTRIAL  FORCES 

would  result  in  an  increased  net  aggregate  income  for  the  vested 
interests  which  control  these  industries.  A  reasonable  profit  always 
means,  in  effect,  the  largest  obtainable  profit. 

All  this  is  simple  and  obvious,  and  it  should  scarcely  need  explicit 
statement.  It  is  for  these  business  men  to  manage  the  country's 
industry,  of  course,  and  therefore  to  regulate  the  rate  and  volume 
of  output;  and  also  of  course  any  regulation  of  the  output  by  them 
will  be  made  with  a  view  to  the  needs  of  business;  that  is  to  say, 
with  a  view  to  the  largest  obtainable  net  profit,  not  with  a  view 
to  the  physical  needs  of  these  peoples  who  have  come  through 
the  war  and  have  m.ade  the  world  safe  for  the  business  of  the 
vested  interests.  Should  the  business  men  in  charge,  by  any  chance 
aberration,  stray  from  this  straight  and  narrow  path  of  business 
integrity,  and  allow  the  community's  needs  unduly  to  influence  their 
managem.ent  of  the  community's  industry,  they  would  presently 
find  themselves  discredited  and  would  probably  face  insolvency. 
Their  only  salvation  is  a  conscientious  withdrawal  of  efficiency.  All 
this  lies  in  the  nature  of  the  case.  It  is  the  working  of  the  price 
system,  whose  creatures  and  agents  these  business  men  are.  Their 
case  is  rather  pathetic,  as  indeed  they  admit  quite  volubly.  They 
are  not  in  a  position  to  manage  with  a  free  hand,  the  reason  being 
that  they  have  in  the  past,  under  the  routine  requirements  of  the 
price  system  as  it  takes  eft'ect  in  corporation  finance,  taken  on  so 
large  an  overhead  burden  of  fixed  charges  that  any  appreciable  de- 
crease in  the  net  earnings  of  the  business  will  bring  any  well 
m.anaged  concern  of  this  class  face  to  face  with  bankruptcy. 

At  the  present  conjuncture,  brought  on  by  the  war  and  its  ter- 
mination, the  case  stands  somewhat  in  this  typical  shape.  In  the 
recent  past  earnings  have  been  large;  these  large  earnings  (free  in- 
come) have  been  capitalized;  their  capitalized  value  has  been  added 
to  the  corporate  capital  and  covered  with  securities  bearing  a  fixed 
income-charge;  this  income-charge,  representing  free  income,  has 
thereby  become  a  liability  on  the  earnings  of  the  corporation;  this 
liability  cannot  be  met  in  case  the  concern's  net  aggregate  earnings 
fall  off  in  any  degree;  therefore  prices  must  be  kept  up  to  such  a 
figure  as  will  bring  the  largest  net  aggregate  return,  and  the  only 
m.eans  of  keeping  up  prices  is  a  conscientious  withdrawal  of  efficiency 
in  these  staple  industries  on  which  the  community  depends  for  a 
supply  of  the  necessaries  of  life. 

The  business  community  has  hopes  of  tiding  things  over  by 
this  means,  but  it  is  still  a  point  in  doubt  whether  the  present 
unexampled  large  use  of  sabotage  in  the  businesslike  management  of 
the  staple  industries  will  now  suffice  to  bring  the  business  community 
through   this   grave   crisis  without   a   disastrous   shrinkage   of   its 


POTENTIALITIES  OF  PRODUCTION  21 

capitalization,  and  a  consequent  liquidation;  but  the  point  is  not  in 
doubt  that  the  physical  salvation  of  these  peoples  who  have  come 
through  the  war  must  in  any  case  wait  on  the  pecuniary  salvation 
of  these  owners  of  corporate  securities  which  represent  free  income. 
It  is  a  sufficiently  difficult  passage.  It  appears  that  production 
must  be  curtailed  in  the  staple  industries,  on  pain  of  unprofitable 
prices.  The  case  is  not  so  desperate  in  those  industries  which 
have  immediately  to  do  with  the  production  of  superfluities;  but 
even  these,  which  depend  chiefly  on  the  custom  of  those  kept 
classes  to  whom  the  free  income  goes,  are  not  feeling  altogether 
secure.  For  the  good  of  business  it  is  necessary  to  curtail  production 
of  the  means  of  life,  on  pain  of  unprofitable  prices,  at  the  same 
time  that  the  increasing  need  of  all  sorts  of  the  necessaries  of  life 
must  be  met  in  some  passable  fashion,  on  pain  of  such  popular  dis- 
turbances as  will  always  come  of  popular  distress  when  it  passes 
the  limit  of  tolerance. 

Those  wise  business  men  who  are  charged  with  administering  the 
salutary  modicum  of  sabotage  at  this  grave  juncture  may  conceivably 
be  faced  with  a  dubious  choice  between  a  distasteful  curtailment 
of  the  free  income  that  goes  to  the  vested  interests,  on  the  one  hand, 
and  an  unmanageable  onset  of  popular  discontent  on  the  other 
hand.  And  in  either  alternative  lies  disaster.  Present  indications 
would  seem  to  say  that  their  choice  will  fall  out  according  to 
ancient  habit,  that  they  will  be  likely  to  hold  fast  by  an  un- 
diminished free  income  for  the  vested  interests  at  the  possible  cost 
of  any  popular  discontent  that  may  be  in  prospect — and  then,  with 
the  help  of  the  courts  and  the  military  arm,  presently  make  reason- 
able terms  with  any  popular  discontent  that  may  arise.  In  which 
event  it  should  all  occasion  no  surprise  or  resentment,  inasmuch 
as  it  would  be  nothing  unusual  or  irregular  and  would  presumably 
be  the  most  expeditious  way  of  reaching  a  modus  vivendi.  During 
the  past  few  weeks,  too,  quite  an  unusually  large  number  of  machine 
guns  have  been  sold  to  industrial  business  concerns  of  the  larger 
sort,  here  and  there;  at  least  so  they  say.  Business  enterprise  being 
the  palladium  of  the  Republic,  it  is  right  to  take  any  necessary 
m.easures  for  its  safeguarding.  Price  is  of  the  essence  of  the  case, 
whereas  livelihood  is  not. 

The  grave  emergency  that  has  arisen  out  of  the  war  and  its  pro- 
visional conclusion  is,  after  all,  nothing  exceptional  except  in  mag- 
nitude and  severity.  In  substance  it  is  the  same  sort  of  thing  that 
goes  on  continually  but  unobtrusively  and  as  a  matter  of  course  in 
ordinary  times  of  business  as  usual.  It  is  only  that  the  extremity 
of  the  case  is  calling  attention  to  itself.  At  the  same  time  it  serves 
impressively  to  enforce  the  broad  proposition  that  a  conscientious 


22        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

withdrawal  of  efficiency  is  the  beginning  of  wisdom  in  all  es- 
tablished business  enterprise  that  has  to  do  with  industrial  produc- 
tion. But  it  has  been  found  that  this  grave  interest  which  the 
vested  interests  always  have  in  a  salutary  retardation  of  industry 
at  one  point  or  another  cannot  well  be  left  altogether  to  the  hap- 
hazard and  ill-coordinated  efforts  of  individual  business  concerns, 
each  taking  care  of  its  ovvn  particular  line  of  sabotage  within  its 
own  premises.  The  needed  sabotage  can  best  be  administered  on  a 
comprehensive  plan  and  by  a  central  authority,  since  the  country's 
industry  is  of  the  nature  of  a  comprehensive  interlocking  system, 
whereas  the  business  concerns  which  are  called  on  to  control  the 
motions  of  this  industrial  system  will  necessarily  work  piece-meal, 
in  severalty  and  at  cross-purposes.  In  effect,  their  working  at  cross- 
purposes  results  in  a  sufficiently  large  aggregate  retardation  of 
industry,  of  course,  but  the  resulting  retardation  is  necessarily  some- 
what blindly  apportioned  and  does  not  converge  to  a  neat  and  per- 
spicuous outcome.  Even  a  reasonable  amount  of  collusion  among 
the  interested  business  concerns  will  not  by  itself  suffice  to  carry 
on  that  comprehensive  moving  equilibrium  of  sabotage  that  is  re- 
quired to  preserve  the  business  community  from  recurrent  collapse 
or  stagnation,  or  to  bring  the  nation's  traffic  into  line  with  the 
general  needs  of  the  vested  interests. 

Where  the  national  government  is  charged  with  the  general  care 
of  the  country's  business  interests,  as  is  invariably  the  case  among 
the  civilized  nations,  it  follows  from  the  nature  of  the  case  that  the 
nation's  lawgivers  and  administration  will  have  some  share  in  ad- 
ministering that  necessary  modicum  of  sabotage  that  must  always 
go  into  the  day's  work  of  carrying  on  industry  by  business  methods 
and  for  business  purposes.  The  government  is  in  a  position  to  penal- 
ize excessive  or  unwholesome  traffic.  So,  it  is  always  considered 
necessary,  or  at  least  expedient,  by  all  sound  mercantilists  to  impose 
and  maintain  a  certain  balance  or  proportion  among  the  several 
branches  of  industry  and  trade  that  go  to  make  up  the  nation's 
industrial  system.  The  purpose  commonly  urged  for  measures  of 
this  class  is  the  fuller  utilization  of  the  nation's  industrial  resources 
in  material,  equipment,  and  man  power;  the  invariable  effect  is  a 
lowered  efficiency  and  a  wasteful  use  of  these  resources,  together 
with  an  increase  of  international  jealousy.  But  measures  of  that 
kind  are  thought  to  be  expedient  by  the  mercantilists  for  these 
purposes — that  is  to  say,  by  the  statesmen  of  these  civilized  nations, 
for  the  purposes  of  the  vested  interests.  The  chief  and  nearly 
sole  means  of  maintaining  such  a  fabricated  balance  and  propor- 
tion among  the  nation's  industries  is  to  obstruct  the  traffic  at  some 
critical  point  by  prohibiting  or  penalizing  any  exuberant  undesirables 


POTENTIALITIES  OF  PRODUCTION  23 

among  these  branches  of  industry.     Disallowance,  in  whole  or  in 
part,  is  the  usual  and  standard  method. 

The  great  standing  illustration  of  sabotage  administered  by  the 
government  is  the  protective  tariff,  of  course.  It  protects  certain 
special  interests  by  obstructing  competition  from  beyond  the  frontier. 
This  is  the  main  use  of  a  national  boundary.  The  effect  of  the 
tariff  is  to  keep  the  supply  of  goods  down  and  thereby  keep  the 
price  up,  and  so  to  bring  reasonably  satisfactory  dividends  to 
those  special  interests  which  deal  in  the  protected  articles  of  trade, 
at  the  cost  of  the  underlying  community.  A  protective  tariff  is  a 
typical  conspiracy  in  restraint  of  trade.  It  brings  a  relatively  small, 
though  absolutely  large,  run  of  free  income  to  the  special  interests 
which  benefit  by  it,  at  a  relatively,  and  absolutely,  large  cost  to 
the  underlying  community,  and  so  it  gives  rise  to  a  body  of  vested 
rights  and  intangible  assets  belonging  to  these  special  interests. 

Of  a  similar  character,  in  so  far  that  in  effect  they  are  in  the 
nature  of  sabotage — conscientious  withdrawal  of  efficiency — are  all 
manner  of  excise  and  revenue-stamp  regulations;  although  they  are 
not  always  designed  for  that  purpose.  Such  would  be,  for  instance, 
the  partial  or  complete  prohibition  of  alcoholic  beverages,  the  regu- 
lation of  the  trade  in  tobacco,  opium,  and  other  deleterious  nar- 
cotics, drugs,  poisons,  and  high  explosives.  Of  the  same  nature,  in 
effect  if  not  in  intention,  are  such  regulations  as  the  oleomargarine 
law;  as  also  the  unnecessarily  costly  and  vexatious  routine  of  in- 
spection imposed  on  the  production  of  industrial  (denatured)  alco- 
hol, which  has  inured  to  the  benefit  of  certain  business  concerns 
that  are  interested  in  other  fuels  for  use  in  internal-combustion 
engines;  so  also  the  singularly  vexatious  and  elaborately  imbecile 
specifications  that  limit  and  discourage  the  use  of  the  parcel  post, 
for  the  benefit  of  the  express  companies  and  other  carriers  which 
have  a  vested  interest  in  traffic  of  that  kind. 

It  is  worth  noting  in  the  same  connection,  although  it  comes  in 
from  the  other  side  of  the  case,  that  ever  since  the  express 
companies  have  been  taken  over  by  the  federal  administration  there 
has  visibly  gone  into  effect  a  comprehensive  system  of  vexation  and 
delay  in  the  detail  conduct  of  their  traffic,  so  contrived  as  to  dis- 
credit federal  control  of  this  traffic  and  thereby  provoke  a  popular 
sentiment  in  favor  of  its  early  return  to  private  control.  Much 
the  same  state  of  things  has  been  in  evidence  in  the  railway  traffic 
under  similar  conditions.  Sabotage  is  serviceable  as  a  deterrent, 
whether  in  furtherance  of  the  administration  work  or  in  contraven- 
tion of  it. 

In  what  has  just  been  said  there  is,  of  course,  no  intention  to 
find  fault  with  any  of  these  uses  of  sabotage.    It  is  not  a  question 


24       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  morals  and  good  intentions.  It  is  always  to  be  presumed  as  a 
matter  of  course  that  the  guiding  spirit  in  all  such  governmental 
moves  to  regularize  the  nation's  affairs,  whether  by  restraint  or  by 
incitement,  is  a  wise  solicitude  for  the  nation's  enduring  gain  and 
security.  All  that  can  be  said  here  is  that  many  of  these  wise 
measures  of  restraint  and  incitement  are  in  the  nature  of  sabotage, 
and  that  in  effect  they  habitually,  though  not  invariably,  inure  to 
the  benefit  of  certain  vested  interests — ordinarily  vested  interests 
which  bulk  large  in  the  ownership  and  control  of  the  nation's  re- 
sources. That  these  measures  are  quite  legitimate  and  presumably 
salutary,  therefore,  goes  without  saying.  In  effect  they  are  measures 
for  hindering  traffic  and  industry  at  one  point  or  another,  which 
may  often  be  a  wise  precaution. 

Survey  of  MOO  Industiial  Establishments^  National 
Association  of  Manufacturers  * 

A  post-armistice  trade  conditions  survey  just  completed  among 
the  4400  industrial  establishments  comprising  the  membership  of 
the  National  Association  of  Manufacturers  shows  that  with  the  ex- 
ception of  5  out  of  22  principal  groups  of  industries  throughout  the 
United  States,  business  activity  is  approximately  between  25  and  50 
per  cent  of  normal. 

The  five  divisions  of  industry  reporting  a  predominating  condi- 
tion of  present  business  prosperity  are  the  jewelry  and  silverware, 
musical  instruments  and  vehicle  groups  (the  last  mentioned  includ- 
ing automobile  manufacture),  rubber  and  tobacco. 

Sixteen  out  of  the  remaining  17  groups  shown  in  the  classifica- 
tion of  industries  reported  general  unsatisfactory  business  condi- 
tions, below  50  per  cent  of  normal.  The  exception,  namely,  leather 
and  manufactures,  reported  business  about  evenly  divided  as  between 
fair  and  good. 

Analysis  of  the  reports  received  from  manufacturers  by  geo- 
graphical districts  fails  to  indicate  any  considerable  business  activity 
in  districts  other  than  those  largely  devoted  to  manufacturing 
jewelry  (around  Providence,  R.  I.,  or  Attleboro,  Mass.),  and  a  few 
sections  (such  as  Detroit),  where  automobile  manufacturing  plants 
are  situated. 

Factors  Impeding  Business  Progress 

In  the  general  order  of  importance  the  following  factors  are 

*  Reprinted  by  permission  from  American  Industries,  the  magazine  of 
the  National  Association  of  Manufacturers  of  the  United  States,  30 
Church  St.,  New  York,  N.  Y.,  Frederic  W.  Keough,  Editor. 


POTENTIALITIES  OF  PRODUCTION  25 

stated  to  be  the  chief  obstacles  now  prevailing  to  prevent  general 
business  activity: 

(i)     Delay  in  signing  the  treaty  of  peace. 

(2)  General  high  costs  of  labor  and  materials. 

(3)  Sudden  cessation  of  war  buying  operations  by  the  United 
States  and  foreign  governments. 

(4)  Hand-to-mouth  buying  by  jobbers,  retailers  and  consumers 
awaiting  expected  price  reductions. 

(5)  Continued  Government  control,  management  and  opera- 
tion of  railroads,  etc. 

(6)  Sudden  imposition  of  heavy  war  revenue  tax  burdens  on 
industry. 

(7)  Labor  unrest,  agitation  and  industrial  strife. 

(8)  High  prices  of  wheat  due  to  Government  guarantee. 

(9)  Unemployment  and  poor  distribution  of  labor  forces  re- 
leased from  military  or  naval  service. 

(10)  Delay  in  settlement  by  Federal  Government  of  claims  for 
payment  under  informal  war  contracts. 

(11)  Partial  shutting  off  of  important  European  markets  due 
to  import  trade  embargoes  by  Great  Britain,  France  and  Italy. 

3Ieyer  Bloom  field:  Management  and  Men* 
(pp.  62-64-65) 

There  is  not  a  more  respected  employer  in  all  England  than  Mr. 
W,  L.  Hichens,  whose  various  interests  embrace  a  pay  roll  of  thirty- 
five  thousand  employees.  I  asked  him  for  his  views  as  to  the  output 
question  and  how  labor  and  management  were  going  to  meet  it.  .    . 

"I  feel  convinced  that  the  production  of  this  country  can  be 
largely  increased  because  I  believe  that  it  is  still  in  us  to  make 
a  m.uch  bigger  effort  than  we  have  hitherto.  Before  the  war,  the 
output  per  workingman  in  the  United  States  was  two  and  a  half 
times  as  great  as  the  output  per  workingman  in  this  country.  Of 
course,  statistics  are  always  open  to  suspicion,  and  that  figure  is 
open  to  several  qualifications  in  particular,  because  in  the  United 
States  you  have  far  more  labor-saving  devices  than  we  have  in  this 
country.  The  fault  of  that,  I  am  free  to  confess,  lies  very  largely 
with  the  employers  at  home,  who  have  not  taken  the  trouble,  in  a 
great  many  cases,  to  find  out  what  the  latest  and  most  efficient 
labor-saving  devices  were,  because  they  felt  that  they  could  rely 
on  a  comparatively  cheap  labor  supply. 

"It  may  be  surprising  to  say  that  even  now  some  restriction 
of  output  should  exist,  but  the  reason  is  not  really  far  to  seek.  The 
*  Reprinted  by  permission  of  the  publishers,  The  Century  Co. 


26       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

fact  of  the  matter  is  that  we  have  been  unable  in  this  respect  to 
shake  clear  altogether  of  our  pre-war  ideas,  and  we  have  been  unable 
to  adopt  the  new  angle  of  vision  which  we  have  adopted  in  other 
cases.  Restriction  of  output,  as  everybody  knows,  is  a  weapon  in 
the  fight  between  labor  and  capital.  There  is  no  real  object  in 
restricting  output  in  the  hope  that  the  employer  will  be  deluded 
into  the  belief  that  it  is  impossible  to  produce  an  increased  amount 
of  work.  Moreover,  I  think  one  can  easily  show  that  restriction 
of  output  is  a  bad  plan  anyhow,  because  it  is  only  by  increasing 
output  that  one  can  increase  wages.  After  all,  one  can  only  pay 
wages  out  of  production,  and  if  production  is  reduced  the  obvious 
thing  is  that  wages  will  in  the  long  run  have  to  be  reduced  too. 
Labor  agrees  that  it  ought  to  have  a  larger  part  of  the  profit  that 
now  goes  to  capital.  But  the  difficulty  is  that  after  allowing  a 
reasonable  margin  of  profit  for  capital  the  balance  at  the  best  of 
times  would  not  go  very  far  in  im.proving  the  position  of  labor. 
It  would  not  enable  very  much  bigger  wages  to  be  paid  than  are 
paid  to-day.  The  only  way  really  to  pay  considerably  higher  wages 
is  to  increase  substantially  the  production  of  the  country. 

'T  think  that  if  these  points  are  clearly  and  dispassionately  argued 
it  will  be  difficult  for  labor  to  deny  their  justice  and  truth;  but  at  the 
same  time  they  will,  I  believe,  carry  very  little  conviction  to  the 
mind  of  the  workingman,  because  he  will  feel — and,  in  my  opinion, 
quite  rightly — that  the  statement  is  far  too  one-sided  to  be  at  all 
convincing  to  him.  He  will  say:  'Our  difficulty  is  that,  supposing 
we  are  to  increase  production  very  considerably,  what  guaranty 
have  we  got  that  that  increase  will  go  to  us  and  not  all  be  appro- 
priated by  capital?'  The  real  grievance  that  labor  feels  is  that 
capital  has  in  the  past  taken  more  than  its  fair  share  of  the  good 
things  of  this  world,  and  I  think  if  one  looks  at  the  matter  broadly 
one  must  admit  that  there  is  a  good  deal  of  truth  in  this  contention. 
One  has  to  remember  that  this  country  is  a  democracy  and  that  in  a 
democracy  it  is  necessary  for  all  the  members  to  get  together  for 
the  problems  that  they  have  to  decide.  This  is  one  of  the  biggest 
problems  that  calls  for  decision,  and  it  is  imperative  that  we  should 
have  mature  thought  jointly  in  order  that  we  may  come  to  a  right 
conclusion." 

FiTial  Report  of  Federal  Commission  on  Industrial 
Relations,  1915  (p.  34) 

A  careful  analysis  of  all  available  statistics  shows  that  in  our 
great  basic  industries  the  workers  are  unemployed  for  an  average  of 


POTENTIALITIES  OF  PRODUCTION  27 

at  least  one-fifth  of  the  year,  and  that  at  all  times  during  any  normal 
year  there  is  an  army  of  men,  who  can  be  numbered  only  by  hun- 
dreds of  thousands,  who  are  unable  to  find  work  or  who  have  so  far 
degenerated  that  they  cannot  or  will  not  work.  Can  any  nation 
boast  of  industrial  efficiency  when  the  workers,  the  source  of  her 
productive  wealth,  are  employed  to  so  small  a  fraction  of  their  total 
capacity? 

Fundamentally  this  unemployment  seems  to  rise  from  two  great 
causes,  although  many  others  are  contributory.  First,  the  inequality 
of  the  distribution  of  income,  which  leaves  the  great  masses  of  the 
population  (the  true  ultimate  consumers)  unable  to  purchase  the 
products  of  industry  which  they  create,  while  a  few  have  such  a 
superfluity  that  it  can  not  be  normally  consumed  but  must  be  in- 
vested in  new  machinery  for  production,  or  in  the  further  monopoli- 
zation of  land  and  natural  resources. 

The  result  is  that  in  mining  and  other  basic  industries,  we  have 
an  equipment  in  plant  and  developed  property  far  in  excess  of  the 
demands  of  any  normal  year,  the  excess  being,  in  all  probability,  at 
least  25  per  cent.  Each  of  these  mines  and  industrial  plants  keeps 
around  it  a  labor  force  which,  on  the  average,  can  get  work  for  only 
four-fifths  of  the  year,  while  at  the  same  time  the  people  have 
never  had  enough  of  the  products  of  those  very  industries — have 
never  been  adequately  fed,  clothed,  housed,  nor  warmed — for  the 
very  simple  reason  that  they  have  never  been  paid  enough  to  permit 
their  purchase. 

The  second  principal  cause  lies  in  the  denial  of  access  to  land 
and  natural  resources  even  when  they  are  unused  and  unproduc- 
tive, except  at  a  price  and  under  conditions  which  are  practically 
prohibitive. 

W.  I.  King:  Wealth  and  Income  of  the  People  of  the 
United  States^   (pp.  145-148,  151) 

Over  five  times  as  large  a  supply  of  manufactured  articles  is 
now  turned  out  for  each  person  in  the  United  States  as  was 
produced  in  1850.  The  workers  in  industry  have  become  more 
efficient,  each  one,  on  the  average,  producing  more  than  two  and  a 
half  times  as  much  as  in  1850.   .    .    . 

The  figures  given  on  page  439  of  the  Abstract  of  the  United 
States  Census  for  1910  indicate  the  following  investment  per  wage 
earner  for  the  different  census  years. 

*  Copyright,  The  Macmillan   Company.    Reprinted  by  permission. 


28       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


1850 

$557 

1890 

$1,535 

i860 

770 

1900 

1,850 

1870 

825 

1910 

2,706 

1880 

1,021 

On  page  27,  the  United  States  Census  Report  of  1Q04  on  Wealth, 
Debt,  and  Taxation  estimates  the  total  value,  in  1899,  of  railway 
property,  street  railways,  canals,  and  ships  at  $11,248,500,000  or 
approximately  $10,425  per  employee,  or  more  than  five  times  the  in- 
vestment per  employee  in  manufacturing.  It  is,  therefore,  not  at 
all  surprising  that,  with  so  much  more  expensive  equipment,  the 
product  per  man  is  about  double  what  it  is  in  manufacturing.  .  .  . 
The  last  decade  has  witnessed  a  decided  increase  in  the  quan- 
tity of  product  per  worker  in  the  mines,  while,  in  the  other 
fields  of  activity,  there  has  been  only  a  slight  change  during  the 
same  period.  The  reasons  for  this  are  not  clear  but  the  probable 
cause  is  the  decided  improvements  in  mining  methods  brought  about 
by  the  more  general  introduction  of  power  machinery. 


J.    UNORGANIZED  PRODUCTION 

David  Friday:  Production  After  the  War  * 

There  is  evidence  that  we  have  increased  our  output  of  products 
form  25  to  30  per  cent  over  the  pre-war  period  through  the  complete 
utiHzation  of  our  natural  resources,  our  plant  and  machinery,  and 
our  labor.  If  production  is  allowed  to  return  to  the  pre-war  level 
output  will  slump  off  by  20  per  cent.  This  would  mean  a  corre- 
sponding waste  of  productive  resources  and  a  decrease  of  $14,000,- 
000,000  per  annum  in  our  National  income  as  measured  by  the 
present  price  level;  even  if  prices  should  fall  30  per  cent,  the  de- 
crease would  still  be  approximately  $10,000,000,000,  .  .  . 

A  decline  of  the  high  level  that  we  have  reached  during  the  last 
two  years  will  bring  about  a  lowering  of  the  standard  of  living 
which  our  laboring  classes  have  attained  during  the  war.  .    .    . 

Such  a  fall  of  output  will  mean  a  decline  by  half  in  the  volume 
of  annual  savings  which  we  have  made  during  191 6,  1917  and 
1918.  .    .    . 

Such  a  decline  in  production  will  further  have  as  its  concomitant 
a  period  of  widespread  unemployment.  ...  It  really  does  appeal 
to  one's  common  sense  as  being  preposterous  that  the  laborer  should 
be  thoroughly  employed  at  good  wages  and  should  therefore  enjoy  a 
high  standard  of  living  when  the  nation  is  wasting  billions  upon 
war,  and  should  find  it  impossible  to  secure  employment  and  main- 
tain that  standard  when  the  waste  of  products  has  ceased.  The 
present  industrial  order  depends  for  productive  activity  upon  indi- 
vidual initiative  motivated  by  profit.  If  it  is  to  endure,  it  must 
demonstrate  its  ability  to  prevent  the  consequences  now  threaten- 
ing American  industry.  If  it  fails  in  this,  then  it  seems  reasonable 
that  the  great  mass  of  laborers  will  demand  a  trial  for  a  regime 
in  which  government  shall  again  control  and  direct  production  as 
it  did  during  the  war  to  bring  to  its  fullest  realization  our  capacity 
for  productive  output.  If  our  production  does  fall  off  by  fourteen 
billion  dollars  and  the  laborer  does  make  this  demand,  who  shall 
say  him  nay? 

It  behooves  those  of  us  who  believe  that  an  order  of  private 

*  From  the  Journal  of  Political  Economy,  February,  1919.     Reprinted 
by  permission  of  the  author  and  the  University  of  Chicago  Press. 

29 


30       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

property  and  individual  initiative  in  industry  is  desirable,  to  ask 
ourselves  what  can  be  done  to  conserve  the  lesson  which  the  war 
has  taught  us  concerning  our  productive  ability.   .    .    . 

The  fundamental  fact  that  demand  and  production  are  inter- 
dependent and  that  therefore  domestic  demand  is  determined  pri- 
marily by  the  state  of  domestic  employment  is  the  first  great  lesson 
to  be  grasped.  The  demand  for  goods  will  depend  primarily  upon 
the  purchasing  power  of  the  masses,  and  the  volume  of  production 
can  be  maintained  only  through  the  complete  employment  of  labor. 
This  means  that  the  business  men  as  a  whole  have  in  their  hands 
the  size  and  scope  of  the  combined  demand  presented  by  the 
markets  of  the  country.  From  the  standpoint  of  national  enterprise, 
the  problem  is,  not  so  much  how  to  capture  the  markets  that  exist 
at  the  end  of  the  war,  but  rather  how  to  keep  the  various  markets 
coordinated  in  such  a  manner  that  the  sellers  in  one  group  of 
markets  will  be  steady  buyers  of  the  things  which  other  markets 
offer.  .    .    . 

Our  business  men  and  legislators  must  be  shown  that  the  great 
mass  of  demand  for  American  goods  must  come  from  American 
buyers  and  not  from  foreign  trade.  There  is  much  misunderstanding 
on  this  point.  There  seems  to  be  a  general  impression  that  with 
our  huge  added  capacity  we  should  have  to  add  almost  all  the 
world's  trade  to  our  own  for  consumption  to  equal  our  present 
capacity.  It  seems  to  the  American  business  man  that  unless  we 
can  capture  a  large  part  of  the  world's  trade,  our  plants  will  have 
to  lie  idle.  Unless  his  convictions  on  this  point  can  be  changed, 
the  energies  and  thought  that  should  go  to  solving  the  problems 
of  the  business  cycle  will  be  frittered  away  upon  legislating  and  ad- 
vertising campaigns  which  have  for  their  chief  end  the  corralling 
of  the  world's  foreign  trade.  An  elucidation  of  principles  and  a 
collection  of  facts  that  would  succeed  in  turning  the  attention  of 
American  business  men  to  the  development  of  regulatory  machinery 
for  the  control  of  the  business  cycle  rather  than  the  control  of 
imports  and  exports  would  be  the  greatest  attainment,  industrial 
and  financial,  since  the  days  of  Alexander  Hamilton's  establishment 
of  national  credit.  Our  total  exports  of  merchandise  in  19 13  were 
$2,484,000,000.  In  191 7  they  amounted  to  $6,233,000,000.  Our 
national  production  was  $35,000,000,000  in  1913,  $65,000,000,000 
in  1917,  and  in  1918  it  amounted  to  $70,000,000,000.  .  .  . 

It  seems  that  somewhere  in  the  present  industrial  process  there 
is  a  factor  of  retardation  which  is  only  occasionally  cast  out  by 
such  a  holocaust  as  war.  What  is  the  secret  of  its  casting  out, 
even  for  the  space  of  three  years?  If  this  secret  can  be  discovered 
we  may  indulge  the  hope  of  institutionalizing  it  and  adding  per- 


POTENTIALITIES  OF  PRODUCTION  31 

manently  ten  billion  dollars  to  our  annual  national  output.  We 
could  then  realize  the  high  standard  of  living  of  which  reformers 
have  dreamed,  and  could  increase  our  national  wealth  at  a  rate 
equal  to  that  of  half  the  civilized  world  outside.  The  usual  view 
of  the  matter  is  that  business  lags  in  normal  times  because  of  a 
failure  of  demand;  that  during  the  war  there  was  an  extraordinary- 
demand,  at  first  from  the  European  governments  and  then  from 
our  own  in  addition.  It  was  this  additional  demand  that  moved 
entrepreneurs  to  produce  to  full  capacity.  Now  that  the  war  demand 
has  fallen  off  it  seems  to  most  people  obvious  that  production 
cannot  go  on  at  its  former  pace.  ''If  it  did,  where  would  we  find 
our  market?"  they  ask.  The  fundamental  fallacy  lurking  in  this 
analysis  has  been  commented  upon  in  an  earlier  part  of  this  paper. 
Production  creates  demand  in  ordinary  times.  It  is  an  old  maxim 
of  political  economy  that  wants  are  insatiable.  This  is  still  true, 
even  in  a  country  where  the  average  of  productive  output  is  as 
high  as  our  own.  Not  more  than  10  per  cent  of  the  families  of  the 
United  States  have  incomes  of  $3,000  or  more.  With  such  a  situa- 
tion there  is  still  an  immense  amount  of  unsatisfied  demand  which 
depends  for  its  appearance  in  the  actual  market  upon  nothing  more 
than  the  opportunity  to  work  and  produce.  To  say  that  production 
lags  because  demand  is  not  forthcoming  starts  with  the  assumption 
that  production  has  already  lagged  and  so  has  reduced  demand. 
The  secret  of  the  thing  must  be  sought  elsewhere.  .    .    . 

A  more  fundamental  explanation  is  that  low  profits,  or  even  or- 
dinary profits,  are  not  sufficient  to  tempt  business  men  to  high 
productive  activity.  Modern  business  is  carried  on  for  profit.  When 
large  profits  are  in  prospect,  therefore,  production  goes  on  at  a 
feverish  rate.  It  is  doubtful  whether  this  explanation  of  the  matter 
is  quite  adequate.  Most  business  men  are  perfectly  willing  to 
produce  for  low  profits,  especially  when  no  opportunity  presents 
itself  to  make  high  ones.  The  fundamental  reason  why  production 
is  retarded  when  only  low  profits  are  in  sight  is  that  a  situation 
which  yields  small  profits  is  one  in  which  the  prices  of  products  and 
the  prices  of  cost  goods  are  close  together.  The  risk  that  a  fall 
in  the  former  or  a  rise  in  the  latter  shall  completely  absorb  the 
margin  of  profit  is  increased  as  these  two  sets  of  prices  approach  each 
other  and  is  lessened  as  the  margin  between  them  widens.  If  the 
prices  of  the  labor  and  material  come  to  exceed  the  price  of  the 
product,  the  entrepreneur  faces  loss  and  ruin.  During  the  last  three 
years  prices  for  products  have  risen  at  an  enormous  rate,  and  while 
it  was  certain  that  the  price  of  cost  goods  would  rise  also,  the 
margin  between  the  two  which  the  entrepreneur  foresaw  was  so  great 


32       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

as  to  minimize  his  risk.    In  this  situation  he  was  willing  to  produce 
to  the  full  capacity  of  his  plant. 

The  factor  that  prevents  a  full  realization  of  our  productive 
capacities  is  this  risk  of  loss.  If  it  could  be  minimized  or  eliminated 
the  nation  could  have  a  high  level  of  productive  output  even  vAth 
normal  profits.  It  is  pertinent,  therefore,  to  inquire  into  the  pos- 
sibility of  decreasing  industrial  risk  through  formal  organization. 
Thus  far  the  most  successful  institution  which  has  been  developed 
for  the  elimination  of  individual  risk  is  the  institution  of  insur- 
ance. In  essence,  this  is  a  pooling  of  the  particular  risk  involved. 
Houses  burn;  the  building  of  the  houses  would,  in  the  absence 
of  insurance,  be  a  venture  fraught  with  risk,  and  the  supply  of 
houses  would  therefore  be  restricted  and  of  poorer  quality.  But  by 
pooling  the  risk  through  fire  insurance,  one  can  be  relieved  of  the 
risk  of  loss  by  fire  for  a  small  payment.  One  can  then  proceed 
to  make  his  plans  for  building  as  though  no  risk  of  such  loss  existed. 
Cannot  a  similar  principle  be  applied  to  the  risk  of  industrial  loss 
with  beneficial  results? 


Charles  W.  Wood:  The  Great  Change'^ 
(pp.  41-54,  101-110) 

So  I  went  to  the  biggest  production  engineer  I  could  find  in  the 
United  States,  Mr.  H.  L.  Gantt,  former  Vice-President  of  the 
American  Society  of  Mechanical  Engineers  and  consulting  expert 
for  many  of  America's  greatest  industrial  organizations. 

"If  our  industrial  machine,"  said  Mr.  Gantt,  "were  made  to  run 
at  top-speed  and  maximum  capacity,  according  to  the  laws  of  pro- 
duction which  have  already  been  discovered,  America  could  win  the 
war,  pay  for  it  out  of  hand,  live  in  comparative  opulence  while  we 
were  doing  so  and  be  immensely  richer  at  the  close  than  we  ever 
were  before. 

"On  the  whole,"  he  said  (this  was  in  June,  1918),  "only  about 
50  per  cent  of  our  industrial  machines  are  actually  operating  dur- 
ing the  time  they  are  expected  to  operate;  and  on  the  whole  these 
machines,  during  the  time  they  are  being  operated,  are  producing 
only  about  50  per  cent  of  what  they  are  expected  to  produce.  This 
brings  our  productive  result  down  to  about  one  fourth  of  what  it 
might  be  if  the  machines  were  run  all  the  time  at  their  highest 
capacity. 

"This  conclusion  is  not  a  guess,  but  is  based  on  reliable  data.    Un- 

*  Copyright,  Boni  &  Liveright. 


POTENTIALITIES  OF  PRODUCTION  33 

fortunately  there  are  many  other  elements  of  unnecessary  waste  in 
our  productive  process  which  cannot  be  so  accurately  calculated,  but 
which  reduce  our  effectiveness  certainly  to  20,  and  very  probably 
to  15  per  cent."  .    .    . 

"There  are  two  main  reasons  why  we  have  such  a  low  per- 
centage of  production.  The  first  is  that  industry  is  not  managed 
by  men  who  have  learned  industrial  management  but  by  business 
men  whose  specialty  has  been  the  study  of  market  conditions. 
The  second  is  that  the  autocratic  owners  of  our  industries  have  not 
always  wanted  100  per  cent  production.  They  have  been  gunning 
for  something  else — for  profits.  How  can  we  get  efficiency  in  our 
industries  when  those  who  control  them  do  not  always  want  effi- 
ciency in  the  first  place  and  wouldn't  know  how  to  get  if  they 
did? 

"Overproduction  has  been  the  bugbear  of  American  business. 
Our  periodic  panics  have  all  been  laid  to  this.  From  time  to  time 
we  have  produced  so  many  goods  that  it  was  thought  there  was  no 
market  for  them,  and  the  industries  have  had  to  shut  down.  This 
brought  unemployment  and  poverty,  with  consequent  inability  to 
buy  the  things  we  had  produced.  The  workers  then  had  to  go 
ragged  because  they  had  produced  so  many  clothes.  They  had  to  go 
bare-footed  because  they  had  produced  so  many  shoes.  They  had 
built  so  many  houses  that  they  had  to  live  outdoors.  Can  any  one 
find  an  excuse  for  continuing  such  a  system  of  industry? 

"How  to  curtail  production  and  avoid  glutting  the  market  has 
often  been  a  problem  of  our  business  interests.  Curtailing  produc- 
tions means  shutting  down  the  plant,  wholly  or  in  part.  The  'captain 
of  industry'  by  this  measurement  thus  became  too  often  a  captain 
of  idleness.  The  way  to  get  rich,  he  discovered,  was  to  quit  pro- 
ducing wealth. 

"...  the  important  man  is  the  man  who  can  produce  the 
goods.  In  most  of  our  industries  heretofore  the  sales  department 
has  been  the  important  factor,  with  the  accounting  department 
possibly  second  and  the  production  of  goods  shunted  into  third 
place.    .    .    . 

"Few  of  our  business  men,"  he  explained,  "have  ever  known 
what  it  costs  to  produce  an  article.  They  are  the  victims  generally 
of  a  false  cost-keeping  system.  When  an  accountant  wants  to 
figure  the  cost  of  an  article,  one  of  the  first  things  he  does  is  to 
throw  in  all  the  'overhead.'  Even  though  nine-tenths  of  the  plant 
is  absolutely  idle,  100  per  cent  of  the  whole  investment  is  charged 
to  the  'cost  of  production.'  This  is  altogether  misleading.  If  I 
rent  .two  apartments  in  New  York  at  $100  a  month  each,  then  live 


34       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

in  one  and  keep  the  other  closed,  I  cannot  honestly  claim  that  it 
costs  me  $200  a  month  for  a  place  to  sleep. 

"All  our  accounting  systems  should  contain  another  column, 
one  showing  the  losses  incurred  through  shut-downs,  strikes,  the 
idleness  of  any  part  of  the  plant,  experiments  that  do  not  work, 
failure  to  get  supplies,  anything  and  everything  which  is  not  right- 
fully chargeable  to  the  actual  process  of  production.  In  one  column, 
then,  the  actual  cost  of  production  would  appear;  in  the  other  the 
manufacturer  could  see  at  a  glance  the  tremendous  cost  of  non- 
production  and  would  be  anxious  to  repair  the  leak.  The  reason  he 
doesn't  repair  it  oftener  to-day  is  that  his  accountants  have  covered 
it  up  with  pretty  figures. 

....  "We  have  never  had  real  overproduction  yet,"  the 
engineer  answered.  "We  have  never  produced  more  things  than 
we  wanted.  All  that  we  have  done  is  to  produce  more  than  we 
could  buy.  With  distribution  simplified,  that  bugbear  would  be 
removed.  If  the  time  ever  comes  that  we  have  produced  all  the 
things  we  need,  most  of  us  won't  mind  knocking  off  work  a  while." 
[Page  100 — Walter  N.  Polakov.  During  the  war  Power  Expert  for 
the  United  States  Shipping  Board.] 

"Engineers  have  always  recognized  the  terrific  waste  of  natural 
resources  and  of  human  life  involved  in  our  industrial  system,  but 
those  in  control  of  the  system  were  not  interested.  If  we  talked 
'maximum  production'  to  them,  they  were  deaf  or  else  they  were 
scared  of  an  over-production  panic.  If  we  talked  of  the  waste  of 
human  life,  the  discouragement  of  the  workers  and  their  consequent 
inefficiency,  the  captains  of  industry  thought  we  were  sentimental- 
izing and  replied  that  'business  is  business.'  Although  a  few  indi- 
vidual firms  were  enlightened  enough  to  introduce  a  common  sense 
and  humane  system  in  their  industries,  we  couldn't  inaugurate  gen- 
eral and  nation-wide  economies.  The  result  was  that  more  than 
half  of  our  machinery  was  always  idle  while  the  rest  was  running 
inefficiently;  and  more  than  half  of  our  labor  power  was  wasted, 
while  more  than  half  of  that  which  wasn't  wasted  outright  was  used 
to  very  poor  advantage. 

"The  American  industrial  machine  was  like  a  great  plant,  if  we 
can  imagine  such  a  thing,  where  every  department  was  antagonizing 
every  other  department,  where  the  object  of  the  boiler-room  was  to 
furnish  as  little  power  as  possible  at  the  highest  possible  rate, 
and  the  object  of  the  shipping  room  was  to  deliver  the  goods  in  the 
m.ost  roundabout  way  imaginable.  The  object  of  the  business  office 
was  to  fix  the  highest  price  obtainable;  in  other  words,  to  make 
the  distribution  of  the  goods  as  difficult  as  it  could  be  made,  and 
still  keep  th^  industry  out  of  a  receiver's  hands.    Neither  prosperity 


POTENTIALITIES  OF  PRODUCTION  35 

nor  humanity  could  result  from  such  a  system,  and  nothing  but  the 
grace  of  God  and  the  illimitable  resources  of  America  gave  us  such 
prosperity  as  we  had. 

"The  old  system  hasn't  gone  yet,  but  it  is  going.  Our  shipping 
department,  the  railroads,  are  no  longer  looking  for  the  longest 
haul.  No  one  is  afraid  of  over-production  [i.e.,  during  the  war] ,  and 
business  men  everywhere  are  ready  to  talk  cooperation  instead  of 
competition.  Saving  power  has  become  a  national  ambition,  not  only 
saving  coal  but  labor  power  as  well.  The  whole  industrial  machine  is 
taking  on  a  new  form;  all  the  departments  are  becoming  coordinated, 
and  the  friction  which  was  once  considered  sacred  (for  competition  is 
another  word  for  friction)  is  being  eliminated.  Not  anywhere  as  fast, 
of  course,  as  we  engineers  would  like  to  see  it  happen,  but  an  inspir- 
ing start  has  been  made. 

"If  the  organization  is  continued  to  a  logical  conclusion,"  Mr. 
Polakov  added,  "it  is  bound  to  bring  undreamed-of  prosperity  to 
all  America.  We  shall  be  able  to  pay  for  the  war  in  almost  no 
time  and  to  enjoy  life  on  a  scale  that  the  world  has  never  known. 
For  the  labor  of  every  man  will  be  worth  double  or  triple  its 
former  value,  both  to  himself  and  to  society  at  large. 

"For  the  new  system  is  not  based  upon  the  principle  of  speeding 
up  and  grinding  down  the  workers.  In  every  case  of  war  reorganiza- 
tion, where  industry  has  been  quickened  and  something  like  maxi- 
mum results  obtained,  there  has  been  a  decided  betterment  of  the 
condition  of  the  toilers.  The  ten-hour  day  has  generally  given  way  to 
eight;  and  there  is  every  reason  to  believe  that  the  six-hour  day  will 
soon  prove  still  more  economical.  This  is  not  because  of  any  sudden 
surge  of  sentiment,  but  because  the  time  has  arrived  when  the 
nation,  out  of  dire  necessity,  had  to  listen  to  her  engineers.    .    .    . 

"Henry  Ford,"  he  explained,  "discovered  that  he  could  bring 
automobiles  within  reach  of  his  people  simply  by  securing  maximum 
production.  If  industry  were  controlled  generally  by  production 
specialists  instead  of  by  market  specialists,  the  same  result  would 
be  more  often  attained.  Everybody  would  be  busy  producing  things 
the  people  want  at  prices  which  they  can  afford  to  pay. 

"In  the  cost  of  an  article,  as  manufacturers  have  heretofore 
been  reckoning  cost,  the  whole  cost  of  a  half-idle  plant  was  included; 
while  if  the  plant  were  not  idle,  the  cost  might  be  cut  in  two 
and  the  producer  realize  a  greater  total  profit  than  before.  There 
is  no  good  reason  why  the  consumer  should  pay  such  a  premium 
on  idleness.  If  a  landlord  refuses  to  rent  half  of  his  houses,  he  can't 
expect  his  tenants  in  the  other  buildings  to  pay  him  double  rent. 

"It  took  the  war  to  teach  us  the  necessity  for  economical  pro- 
duction; and  it  is  obvious  that  we  would  have  been  helpless  to-day 


36       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

if  we  had  continued  to  depend  for  our  vital  needs  upon  a  dis- 
organized scramble  for  individual  profits.  But  such  a  system  is  no 
better  for  peace  than  it  is  for  war,  and  I  cannot  imagine  that  we 
shall  return  to  it." 

"Just  one  more  question,"  I  asked,  "How  about  that  six-hour 
day?" 

"Coming,"  he  said.  "Still,  I  haven't  yet  been  able  to  demon- 
strate conclusively  that  men  can  do  more  in  six  hours  than  they  can 
in  eight.  Positively  they  can  do  more  in  six  than  they  can  do  in 
ten  or  twelve ;  but,  owing  to  certain  conditions  in  the  plants  where  I 
tried  it  out,  the  six-hour  experiment  is  still  inconclusive. 

"However,"  the  engineer  concluded,  "if  America  seriously  sets 
out  to  eliminate  ALL  the  friction  in  her  industrial  system,  we  may 
expect  a  four,  or  perhaps  a  two-hour  day.  With  production  sim- 
plified and  power  utilized  to  its  fullest  capacity,  we  could  probably 
produce  all  we  want  in  much  less  than  six  hours;  and  with  distribu- 
tion simplified,  we  would  have  no  trouble  in  securing  the  product  for 
our  own  enjoyment." 

"SociaHsm?"  I  asked. 

"Engineering,"  he  corrected. 

Sidney  Webb:  The  Restoration  of  Trade  Union  Condi- 
tions* (pp.  37-38,  41-42) 

What  is  perhaps  of  more  importance  from  the  employer's  stand- 
point is  that  they  have  discovered  how  to  increase  the  output  of  their 
establishments  without  increasing  the  number  of  skilled  operatives; 
and,  at  the  same  time,  how  to  diminish  the  "labor  cost"  of  their 
products,  irrespective  of  any  reduction  of  the  rates  of  wages.  A 
large  section  of  British  industry  has  at  last  learned  by  experience, 
as  it  had  long  admitted  in  theory,  the  lesson  of  the  economic  ad- 
vantage of  a  large  output,  of  production  for  a  continuous  demand, 
of  standardization  and  long  runs,  of  the  use  of  automatic  machinery 
for  the  separate  production  of  each  component  part,  of  team-work 
and  specialization  among  the  operatives,  of  universalizing  piece- 
work speed  and  of  not  grudging  to  the  workers  the  larger  earnings 
brought  by  piece-work  effort.  We  do  not  think  it  is  any  exaggera- 
tion to  say  that  the  15,000  or  20,000  establishments,  large  or  small, 
in  every  conceivable  industry,  with  which  the  IMinistry  of  Munitions, 
the  Board  of  Trade,  the  War  Trade  Department,  and  the  Admiralty 
have  been  in  touch,  are  now  turning  out,  on  the  average,  more  than 
twice  the  product  per  operative  employed  that  they  did  before  the 

*  Reprinted  by  permission  of  B.  W.  Huebsch. 


POTENTIALITIES  OF  PRODUCTION  37 

war;  whilst,  assuming  the  same  standard  rates  of  wages,  grade  by- 
grade,  the  labor-cost  works  out  considerably  lower  than  under  the 
old  system. 

Employers,  at  any  rate,  are  abundantly  convinced  of  the  eco- 
nomic advantages  of  the  new  industrial  revolution  that  has  been  ef- 
fected. Not  from  engineering  alone,  but  from  industry  after  in- 
dustry comes  the  report  that  productivity  and  profits  have  alike  so 
much  increased  that  any  reversion  to  the  old  state  of  things  would 
be  disastrous;  and  that  the  continuance  of  the  new  organization  and 
practice  of  their  factories  is  indispensable  if  this  country  is  to  be 
able  to  face  the  impending  fierce  competition  for  the  world's  trade. 
.  .  .  During  the  past  two  years  the  factories  have,  in  many 
cases,  been  enlarged  or  completely  rearranged;  the  applica- 
tion of  power  has  been  revolutionized;  the  provision  for  lighting, 
heating,  and  ventilation  has  been  transformed.  The  course  of 
manufacture  and  the  appliances  have  been  changed.  Many  tens  of 
thousands  of  automatic  lathes  and  other  m.achines  have  been  in- 
stalled, frequently  of  kinds  never  before  employed  in  the  establish- 
ments in  which  ihey  are  now  working,  and  in  some  cases  not  pre- 
viously in  use  in  this  country.  The  addition  made  to  the  machinery 
— almost  all  of  it  in  the  establishments  doing  "war  work" — is  es- 
timated to  run,  in  the  aggregate,  into  hundreds  of  millions  sterling. 
A  large  proportion  of  this  machinery  has  been  put  up  for  the  new 
processes  which  have  been  intruduced  in  connection  with  the  stand- 
ardization of  parts  and  the  long  runs  of  repetition  work;  and  for 
all  this  the  old  time  work  rates  of  wages  have  been  superseded  by 
new  piecework  and  bonus  systems.  With  the  rapidly  progressing 
"dilution  of  labor"  and  the  substitution  of  team  work  for  individual 
production,  the  old  rates  of  speed  and  the  old  standards  of  output 
have  become  wholly  obsolete. 

Finally,  in  order  to  work  the  new  machinery  and  to  execute  the 
newly  devised  processes,  as  well  as  to  replace  the  skilled  mechanics 
called  to  the  colors,  new  classes  of  operatives,  who  would  never  have 
been  allowed  inside  the  establishments  prior  to  the  war,  have  been 
taken  on  and  trained  to  the  new  jobs  to  the  extent  of  several  hun- 
dred thousand,  a  very  large  proportion  of  whom  are  quite  certainly 
determined  to  continue  in  the  new  vocations  that  they  have  gained — 
craftsmen  belonging  to  other  trades,  unapprenticed  handimen,  semi- 
skilled men,  nondescript  persons  from  all  sorts  of  occupations, 
hobbledehoy  youths,  and,  last  of  all,  women,  some  of  whom  have 
now  made  themselves  capable  of  the  work  of  the  all-round  skilled 
craftsman. 


S701)()5 


3.     ORGANIZATION  OF  PRODUCTION 

Walter  E.  Weyl:  The  End  of  the  War*  (p.  303) 

WTiat  we  have  learned  in  war  we  shall  hardl>  forget  in  peace. 
We  shall  no  longer  be  content  with  an  industrial  machine  which  is 
so  ill-regulated  that  it  loses  its  force  in  waste  heat  and  develops  little 
drive.  We  shall  be  obliged  to  retain  conceptions  and  practices 
acquired  during  the  war.  The  new  economic  solidarity,  once  gained, 
can  never  again  be  surrendered. 

For  however  the  war  ends  we  shall  require  the  full  use  of  our 
productive  machinery.  If  no  international  system  is  developed  we 
shall  be  involved  in  new  conflicts  in  which  economic  capacity  and  the 
possibility  of  immediate  economic  mobilization  will  be  decisive 
factors.  On  the  other  hand,  if  we  are  fortunate  enough  to  secure  a 
stable  international  sj^stem  guaranteeing  peace,  the  economic  com- 
petition between  nations  will  for  a  time  at  least  remain.  For  our 
own  progress  and  influence  the  best  possible  utilization  of  our  re- 
sources will  be  essential. 

The  chief  obstacle  in  the  way  of  such  improvement  is  the  multi- 
plicity of  our  conflicting  economic  interests  due  to  our  extreme  so- 
licitude for  special  privilege.  We  still  hold  sacred  all  rights  to 
exploit  and  monopolize,  and  we  divert  an  immense  share  of  the 
wealth  and  income  of  the  nation  to  a  small  social  class.  Our  trust 
movement,  though  it  has  proved  itself  superior  to  industrial  anarchy, 
has  led  to  a  further  accentuation  of  inequality  and  to  a  further 
increase  in  the  power  of  financially  privileged  classes.  Every- 
where we  find  a  stark  insistence  on  special  rights  not  only  by  the 
very  wealthy  but  by  men  of  moderate  and  even  of  small  means.  As 
a  consequence,  although  our  industrial  plants  are  individually  ef- 
fective, they  are  collectively  ineffective.  There  is  no  unifying  con- 
cept to  our  economic  system. 

Ordway  Tead:  The  People's  Part  in  Peace  f 
(pages  112-115;  118-130) 

It  the  nations  are  to  deal  together  through  organizations  en- 
trusted with  special  functions — a  wheat  commission,  for  example, 

*  Copyright,  The  Macmillan   Company.     Reprinted  by  permission. 
t  Reprinted  by  permission  of  Henry  Holt  and  Company,  New  York. 

38 


POTENTIALITIES  OF  PRODUCTION  39 

or  a  coal  or  iron  commission — the  need  for  an  integrated  organiza- 
tion within  each  country  for  the  control  of  each  particular  industry 
becomes  patent. 

Already  for  war  purposes  this  need  is  appreciated.  WTien  the 
government's  demand  for  goods  requires  the  mobilization  of  the 
energies  of  an  entire  industry,  all  manufacturers  in  that  industry 
necessarily  become  a  party  to  the  allocation  of  contracts  and  ma- 
terials. The  fact  that  there  is  only  one  buyer  and  that  this  pur- 
chaser can  take  all  that  the  manufacturers  will  turn  out,  removes 
any  reason  for  secrecy  or  competitive  bidding.  This  has  been  the 
situation — to  take  only  one  example  out  of  many — in  the  wagon  in- 
dustry. It  was  not  enough  for  a  general  "association"  including  only 
the  "big  fellows"  of  the  industry  to  go  to  Washington.  All  vehicle 
manufacturers  had  to  be  represented.  The  convocation  of  the  entire 
industry  in  this  way  made  possible  a  new  and  unprecedented  degree 
of  organization.  The  manufacturers  agreed  that  from  now  on  instead 
of  eight  hundred  they  would  build  only  four  hundred  types  of  wagon ; 
and  the  likelihood  is  that  in  the  course  of  standardization  this  num- 
ber will  be  reduced  to  fifty  with  the  consequent  economies  in  manu- 
facture  further  enlarged.  Uniform  cost-keeping  methods  have  been 
adopted;  and  to  each  concern  has  been  allotted,  at  a  price  which 
the  industry  believes  to  be  fair,  as  much  of  the  Governm-ent's  total 
order  for  wagons  as  it  can  handle.  This  case  is  typical  of  the 
extent  of  combined  action  which  the  war  has  made  essential  in  many 
industries. 

But  a  second  fundamental  idea  must  be  kept  in  view.  Organiza- 
tion must  not  only  be  by  function;  it  must  be  controlled  by  a  group 
representative  of  different  interests.  This  necessity  for  the  partici- 
pation of  opposed  interests  in  affairs  that  affect  them  will  be  es- 
pecially important  after  the  war,  when  the  workers  will  be  in- 
creasingly in  a  position  to  demand  a  share  in  industrial  government. 
Reasons  for  national  organizations  by  industries  and  representative 
of  the  several  parties  are  therefore  forthcoming  from  several  different 
directions.  For  the  employer  an  integrated  industrial  organization 
assures  the  most  economical  manufacturing  methods  by  making  it 
possible  to  standardize  processes  and  product;  and  it  provides  the 
most  successful  selling  methods  abroad  because  of  the  low  prices  at 
which  goods  can  be  offered  by  the  cooperative  selling  agency  which 
an  organized  industry  can  maintain.  For  the  worker  such  represent- 
ative organization  becomes  a  guarantee  of  his  participation  in  the 
control  of  the  industry.  And  for  the  government  and  the  larger 
public  a  well-organized  industry  means  a  single  unit  to  be  dealt 
with  and  controlled  in  both  domestic  and  foreign  trade  relations. 
If,  then,  the  integration  of  the  national  economy  along  these  lines 


40       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

is  desirable,  how  is  it  to  be  achieved?  Are  there  in  evidence  ten- 
dencies in  the  direction  of  representative  national  industrial  organi- 
zations? In  England  there  are.  The  Whitley  Report  has  precipi- 
tated a  vast  amount  of  practical  suggestion  and  action  in  this  very- 
direction.    .    .    . 

Not  directly  fostered  by  the  Whitley  document,  but  equally  in 
harmony  with  its  suggestions,  is  the  Board  of  Control  of  the  Woolen 
and  Worsted  Industries  which  was  created  in  191 6  to  organize  and 
protect  these  trades  for  war  purposes.  The  wool  shortage  made  it 
necessary  for  the  government  to  buy  up  the  whole  clip  not  only  of 
England  but  of  Australia.  This  done,  problems  at  once  arose  as  to 
the  distribution  of  the  supply  among  the  existing  factories  as  well 
as  regarding  the  price  the  government  should  pay  for  spinning  and 
weaving.  Although  experts  from  the  trade  were  at  once  called  in,  it 
was  soon  seen  that  no  satisfactory  "rationing  of  wool"  would  take 
place  in  the  absence  of  a  completely  representative  supervision  of 
the  industry.  A  Board  of  Control  of  thirty-three  members  was, 
therefore,  created,  a  third  of  whom  were  to  represent  the  War  Office, 
another  third  the  employers'  associations,  and  the  remainder  the 
trade  unions.  Upon  this  board  devolves  the  duty  of  allocating  the  raw 
material  in  accordance  with  the  needs  of  the  country  and  the  equip- 
ment of  the  factories,  the  determination  of  hours  and  working  condi- 
tions and  the  settlement  of  "conversion  costs"  on  such  a  basis  that 
the  manufacturers  become  simply  the  agents  of  the  Government 
without  the  introduction  of  profiteering.  So  successfully  has  the 
industry  operated  on  this  basis  that  a  standard  cloth  of  a  specified 
size  and  quality  is  now  to  be  made  at  an  agreed  price  for  civilian 
use.  After  the  war,  while  the  representation  of  the  War  Office  will 
naturally  cease,  ther<e  will  remain  a  structure  of  control  over 
this  industry  which  will  make  it  impossible  ever  to  revert  to  the 
individualistic  competitive  scramble  of  the  last  century.  And  this 
coordination  has  taken  place  in  a  trade  as  disorganized,  speculative, 
and  specialized  as  is  our  own  cotton  manufacturing  industry  at  this 
moment. 

Another  instance  of  joint  control  which  shows  the  inevitable  logic 
of  the  idea  is  at  hand  in  the  three  National  and  District  Marine 
Boards  with  jurisdiction  over  Marine  engineers,  caterers,  and  sailors 
and  firemen  respectively.  The  three  national  boards,  headed  by 
Sir  Leo  Chiozza  Money,  are  charged  with  "the  maintenance  of  the 
maritime  supremacy  of  the  British  Empire  and  the  establishment 
of  a  closer  cooperation  between  the  employer  and  employed  of  the 
British  Mercantile  Marine."  As  is  the  case  in  the  other  trades, 
the  unions  and  the  employers'  association  here  also  become  the  ac- 
knowledged agents  of  the  respective  parties  at  interest. 


POTENTIALITIES  OF  PRODUCTION  41 

Scattered,  therefore,  though  these  examples  of  ventures  in  in- 
dustrial constitutionalism  are,  they  drive  uniformly  in  one  direction. 
They  have  but  one  meaning.  They  contain  implication  of  a  new 
industrial  policy  to  which  England  is  now  committed.  In  conse- 
quence the  Labor  Party  in  its  report  on  reconstruction  is  amply 
justified  in  its  refusal  "to  believe  that  the  British  people  will  per- 
manently tolerate  any  perpetuation  of  the  disorganization,  waste, 
and  inefficiency  involved  in  the  abandonment  of  British  industry 
to  a  jostling  crowd  of  separate  private  employers.  .  .  ."  The 
Party  is  close  to  immediate  realities  in  looking  "to  a  genuinely  scien- 
tific reorganization  of  the  nation's  industry."    .    .    . 

In  our  own  country  the  machinery  of  regulation  is  at  present 
more  complete  than  the  structure  of  a  national  industrial  economy 
which  it  is  potentially  able  to  regulate.  Integration  of  the  nation's 
productive  units  on  a  basis  of  a  representative  control  seems  remote 
enough.  Yet  the  war  pressure  has  created  a  situation  of  complete 
nationalization  and  partial  representation  in  the  whole  transporta- 
tion industry.  Shipping,  shipbuilding,  and  railroading  are  now 
carried  on  under  unified  or  coordinated  managements;  and  the  col- 
lective agreements  that  exist  in  these  three  fields  afford  a  practical 
basis  for  an  ultimate  extension  of  joint  control  beyond  the  con- 
ventional "wages,  hours,  and  conditions." 

There  exist  for  purposes  of  amicable  war-time  adjustment  agree- 
ments between  the  Federal  Government  and  the  unions  of  long- 
shoremen, seamen,  and  of  the  shipbuilding  trades.  Under  these  con- 
tracts representative  agencies  of  conference  and  arbitration  exist, 
and  it  is  not  only  conceivable  but  likely  that  if  governmental 
control  of  shipping  and  shipbuilding  continues  after  the  war  these 
agencies  will  be  put  upon  a  permanent  footing  and  their  powers 
gradually  increased.  Even  more  on  the  railroads  are  the  organiza- 
tions of  the  workers  in  a  position  which  makes  their  representation 
on  managerial  boards  a  normal  next  step.  Joint  dealing  with  the 
operating  and  shop  employees  has  now  become  such  an  accepted 
feature  of  railroad  operation  that  it  will  be  due  to  the  unions'  own 
caution  and  reluctance  if  no  demand  for  representation  in  actual 
policy  making  and  administration  is  pressed  by  the  men — regardless 
of  the  ownership  of  the  roads  after  the  war. 

The  building  trades  furnish  a  further  example  of  an  industry 
in  which  the  organization  of  masters  and  men  is  more  and  m.ore 
co-extensive  with  the  entire  industry;  and  it  is  therefore  among  the 
first  of  the  industries  in  which  joint  control  on  a  national  basis  may 
be  expected.  Nor  should  the  coal  industry  be  excluded  from  mention 
for  the  same  reasons. 

But  apart  from  these  hopeful  signs  of  the  way  things  will  prob- 


42       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ably  move  in  other  large  scale  industries — metal  and  textile  trades — 
the  interesting  recent  developments  in  the  United  States  are  in  the 
field  of  regulation.  The  War  Industries  Board  with  its  new  powers 
stands  as  the  controller  of  industrial  destinies  to  an  unparalleled 
extent.  By  its  control  over  priorities  in  production  and  in  the 
distribution  of  raw  material  within  the  country,  it  can  do  pretty 
much  as  it  likes  with  industry.  In  addition,  there  are  its  price- 
fixing  powers,  which  although  only  advisory  become  extremely  ef- 
fective through  its  other  powers;  and  when  in  addition  to  this  its 
oversight  over  the  purchasing  of  the  Allies  in  this  country  is  con- 
sidered, it  will  be  seen  that  its  control  over  price  can  be  substantial. 
In  the  food  and  fuel  situation  the  extent  of  national  control  is 
already  publicly  known.  Under  their  broad  powers,  the  Food  and 
Fuel  Administrators  are  able  to  control  the  price  and  the  distri- 
bution of  a  number  of  essential  commodities. 

Over  all  trading  activities,  both  domestic  and  foreign,  are  set 
the  War  Trade  Board  and  the  Federal  Trade  Commission.  The  War 
Trade  Board  is  especially  significant  in  the  powers  that  it  wields. 
It  is  expected  to  license  and  control  all  commodities  exported  from 
and  imported  into  this  country,  to  say  nothing  of  its  work  in  regulat- 
ing all  trade  with  the  enemy  or  allies  of  the  enemy.  It  is  hard  to 
grasp  the  potency  of  this  function.  The  Trade  Board  has  absolute 
control  over  the  destinies  of  any  industry  which  must  import  raw 
material  or  which  counts  upon  sales  in  foreign  markets.  Its  work 
reveals  the  practicability,  quite  apart  from  war-time  needs,  of  a 
governmental  body  which  will  represent  the  public  interest  in  deal- 
ings between  the  merchants  of  different  countries  in  the  allocation 
of  raw  stuffs  and  finished  goods.  Even  if  we  create  administrative 
bodies  to  care  for  the  distribution  of  each  commodity,  there  will 
still  be  need  of  a  regulative  body  in  each  country  to  coordinate  the 
demand  of  manufacturers  in  relation  to  available  shipping  space 
for  the  export  of  goods  and  the  carriage  of  raw  material.  The  more 
direct  regulation  of  the  export  of  goods  is  now  permanently  pro- 
vided for  in  the  Webb  Export  Trade  Bill,  which  requires  all  cor- 
porations which  associate  themselves  together  for  foreign  trading 
purposes  to  be  registered  with  and  supervised  by  the  Federal  Trade 
Commission. 

Over  the  field  of  finance,  the  hand  of  national  control  is  also 
extended.  The  Federal  Reserve  Board,  although  not  a  war-time 
body,  is  able  to  control  the  domestic  credit  market  in  the  public 
interest  and  to  keep  money  and  credit  available  in  times  of  string- 
ency. 

The  War  Finance  Corporation  is  organized  to  control  the  flow 
of  capital  in  war-time;  to  encourage  and  help  in  financing  projects 


POTENTIALITIES  OF  PRODUCTION  43 

required  by  the  war,  to  discourage  expenditure  on  unessential  enter- 
prises. Its  Capital  Issues  Committee  has  plainly  a  function  which 
is  socially  wise  not  alone  in  times  of  war.  The  need  for  public 
control  over  the  expenditure  of  capital  in  new  ventures  and  in  the 
expansion  of  old  ones  has  been  increasingly  recognized  in  the  last 
few  years  as  the  anarchic  results  of  unrestricted  competitive  invest- 
ment are  understood.  In  the  exercise  of  such  a  crucial  function 
every  precaution  must  certainly  be  taken  against  an  arbitrary  or 
repressive  use  of  power;  and  of  course  one  way  to  help  in  this  di- 
rection is  to  provide  for  labor  representation  on  the  directorate  of 
this  corporation,  as  well  as  a  voice  for  other  special  interests  that 
may  upon  analysis  appear  to  be  present. 

It  is  doubtful  whether  amid  this  array  of  boards  there  are  many 
corporations  which  are  having  yet  to  submit  to  simultaneous  control 
in  the  field  of  manufacture,  sales,  and  finance.  But  in  respect  to 
these  several  phases  of  industry,  agencies  of  potential  control  are 
at  work.  To  what  extent  they  duplicate  the  work  that  a  scheme  of 
national  industrial  councils  would  delegate  to  the  industries  them- 
selves, it  is  not  yet  easy  to  say,  although  it  is  probable  that  there  is 
in  the  hurry  of  war  organization  some  unnecessary  duplication  of 
function.  The  important  thing  to  understand,  however,  is  that  we 
have  at  least  taken  one  big  forward  step  as  a  nation.  We  are 
creating  administrative  and  regulative  machinery  on  a  national  scale 
to  oversee  the  conduct  of  affairs  in  the  national  interest  and  for 
social  purposes.  It  is  implicit  in  the  fact  of  all  this  special  activity 
for  war  ends  that  it  is  undertaken  for  the  benefit  of  all  the  people, 
that  the  public  interest  is  receiving  a  major  recognition  as  never 
before.  At  least  for  the  war  we  have  achieved  a  social  purpose  for 
industry — that  is,  for  the  war  industries.  It  remains  only  for  us 
to  decide  whether  the  retention  of  this  motive  after  the  war  will 
make  for  a  more  rational  and  productive  system  of  manufacture. 
What  will  be  our  decision? 

No  one  can  prophesy  how  rapidly  the  forces  of  integration  within 
industry  itself  will  work  in  America.  But  the  prophecy  which  Dr. 
Friedrich  Nauman  recently  made  regarding  conditions  in  the  coun- 
tries of  the  Central  Powers  is  not  wide  of  the  mark  for  all  of  the 
countries  which  propose  to  buy  and  sell  in  the  world  markets  under 
some  degree  of  international  oversight.  "Henceforward,"  he  said, 
"there  will  actually  be  a  real  political  economic  system  by  which  is 
meant  central  government  control  of  sale  and  purchase,  and  of  the 
methods,  extent,  and  valuation  of  production." 

Whether  we  agree  or  sympathize  with  this  picture  of  govern- 
mental control  or  not,  is  a  secondary  consideration.     The  fact  is 


44       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

that  some  form  of  national  organization  of  industries  as  indigenous, 
voluntary,  and  flexible  as  our  industrial  statesmen  have  ingenuity 
to  contrive,  is  a  necessary  concomitant  of  peaceable  international 
trade.  And  such  organizations  will  function  in  the  public  interest 
only  when  they  are  thoroughly  representative  in  character;  when 
consumers  and  workers  no  less  than  managers  and  investors  are  part- 
ners in  the  enterprise.  It  is  not  necessary  that  this  sort  of  inte- 
gration should  end  in  government  ownership,  or  clumsy  and  over- 
weening monopolies.  The  national  industrial  councils  of  England 
exist  specifically  to  minimize  the  extent  of  official  interference.  In- 
deed, the  desire  to  be  autonomous  has  governed  their  entire  creation. 
National  representative  organization  of  each  industry  is,  there- 
fore, simply  the  administrative  condition  necessary  to  assure  demo- 
cratic action  in  industry  at  home  and  democratic  representation  in 
international  economic  councils  abroad. 

J.  A,  Hobson:  Democracy  After  the  War* 
(pp.  171-172) 

What  attitude  shall  the  workers  adopt  towards  proposals  for 
increased  productivity?  What  attitude  towards  the  State  as  con- 
troller of  industry?  These  two  problems,  as  will  presently  be  shown, 
are  not  independent  of  one  another.  But  it  will  be  well  to  approach 
them  by  the  way  of  the  demand  for  higher  productivity.  Now  here 
at  the  outset  we  are  met  by  deep  suspicion  on  the  part  of  labor. 
Increased  productivity  and  the  means  of  attaining  it,  i.e.,  dilution  of 
labor,  "scientific  management,"  premium  bonus  and  profit-sharing, 
workshop  committees,  etc.,  are,  it  will  be  contended,  a  capitalist 
dodge  for  getting  more  out  of  labor.  In  many  labor  quarters  there 
exists  a  disposition  to  lump  together  for  wholesale  condemnation, 
without  examination,  all  proposals  which  appear  to  be  designed  to 
make  industry  more  productive.  Even  in  pleading  for  a  suspension 
of  this  judgm.ent  and  for  more  discrimination,  I  shall  here  run  the 
risk  of  being  suspected  of  playing  the  capitalist  game.  Nevertheless 
it  is  certain  that  if  any  industrial  democracy,  carrying  a  substantial 
improvem.ent  in  the  life  of  labor,  is  to  be  achieved,  great  advances 
in  the  productivity  of  labor  are  necessary.  The  assumption  that 
this  necessarily  involves  a  painful  or  injurious  intensification  of  toil 
on  the  part  of  the  workers  is  unwarranted.  Increased  productivity  of 
industry  is  not  synonymous  with  increased  toil,  though  this  may 
seem  to  follow  from  a  narrowly  conceived  idea  of  labor  as  the  source 
of  all  wealth.     Improved  organization  of  labor,  the  invention  and 

*  Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 


POTENTIALITIES  OF  PRODUCTION  45 

application  of  better  machinery  and  power,  better  methods  of 
transport  and  marketing,  access  to  better  and  more  abundant  ma- 
terials, more  intelligence  and  enterprise  in  the  management,  all  these 
and  many  other  factors  contribute  to  enlarged  productivity. 


III.     THE  PRICE  SYSTEM 


I.    TACTICS   OF  THE   PRICE   SYSTEM 

Wesley  C.  Mitchell:  Business  Cycles  * 
(pp.  24-31,  585) 

A  BUSINESS  enterprise  may  participate  directly  or  indirectly  in 
the  work  of  providing  the  nation  with  useful  goods,  or  it  may  not,  for 
there  are  divers  ways  of  making  money  which  contribute  nothing 
toward  the  nation's  welfare,  and  divers  ways  which  are  positively 
detrimental  to  future  welfare.  But,  for  the  understanding  of  pros- 
perity and  depression,  it  is  more  important  to  observe  that  even 
the  enterprises  which  are  most  indubitably  making  useful  goods  do 
so  only  so  far  as  the  operation  is  expected  to  serve  the  primary 
business  end  of  making  profits.  Any  other  attitude,  indeed,  is 
impracticable  under  the  system  of  money  economy.  Only  govern- 
ment and  philanthropy  can  afford  to  make  public  welfare  their  first 
consideration.  For  the  man  who  allowed  his  humanitarian  interests 
to  control  his  business  policy  would  soon  be  forced  out  of  business. 
From  the  business  standpoint  the  useful  goods  produced  or  helpful 
services  rendered  are  merely  by-products  of  the  process  of  earning 
dividends.  It  follows  that  a  theory  of  modern  prosperity  must  deal 
primarily  with  business  conditions — with  the  pecuniary  aspect  of 
economic  activity. 

The  practice  has  long  prevailed  among  economists  of  neglecting 
this  aspect  on  the  ground  that  money  is  merely  a  symbol,  the  use 
of  which  makes  no  difference,  save  one  of  convenience,  so  long  as  the 
monetary  system  is  not  out  of  order.  The  economists  have  looked 
beneath  "the  money  surface  of  things"  to  the  labor  and  goods, 
or  the  sacrifices  and  utilities,  which  they  assumed  to  be  the  matters 
of  real  concern.  When  applied  to  the  theory  of  crises,  this  practice 
has  diverted  attention  from  the  difficulties  of  business  to  the  diffi- 
culties of  industry,  as  if  the  latter  were  the  fundamental  source  of 
economic  ills.  Thus  "over-production"  has  sometimes  been  repre- 
sented as  if  it  were  a  chronic  disorder  of  the  factory  system  as  such, 
which  periodically  infects  the  business  world,  and  causes  an  epidemic 
of  bankruptcies. 

Such  a  view  confuses  the  investigation  of  crises  because  it  ob- 

*  Reprinted  by  permission  of  the  University  of  California  Press. 

49 


50       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

scures  the  relations  between  industry,  commerce,  and  business.  The 
industrial  process  of  providing  and  transporting  goods,  the  com- 
mercial process  of  collecting  and  redistributing  them,  and  the  busi- 
ness process  of  making  money  are  measurably  distinct,  although 
they  run  side  by  side,  and  are  largely  concerned  with  the  same 
commodities.  For  the  well-being  of  the  community,  efficient  in- 
dustry and  commerce  are  vastly  more  important  than  successful 
money-making.  A  business  panic  which  did  not  interrupt  the  mak- 
ing and  distributing  of  wares  desired  by  the  community  would  be 
no  great  disaster.  But  the  whip-hand  among  these  three  processes 
belongs  none  the  less  to  business,  since  the  very  men  who  as  manu- 
facturers and  merchants  provide  for  the  common  welfare  base  their 
operations  on  the  prospect  of  money  profits.  In  practice,  industry 
and  commerce  are  thoroughly  subordinated  to  business. 

.  .  .  Business  prosperity,  in  its  turn,  depends  upon  the 
factors  which  control  present  and  prospective  profits,  together  with 
present  and  prospective  ability  to  meet  financial  obligations.  Profits 
are  made  by  connected  series  of  purchases  and  sales — whether  in 
commerce  or  manufacture,  farming  or  miining.  Accordingly,  the 
margins  between  the  prices  at  which  goods  can  be  bought  and  sold 
are  the  fundamental  condition  of  business  prosperity.  Closety  con- 
nected vdth  and  in  large  measure  dependent  upon  price-margins  is 
the  other  great  factor — the  volume  of  transactions  effected.  Just  as 
the  ever  recurring  changes  within  the  system  of  prices  affect  busi- 
ness prosperity  and  through  it  national  welfare,  so  do  changes  in 
national  welfare  and  business  prosperity  react  upon  prices.  A  period 
of  business  expansion  causes  an  interminable  series  of  readjustments 
in  the  prices  of  various  goods.  These  readjustments  in  their  turn 
alter  the  pecuniary  prospects  of  the  business  enterprises  which 
buy  or  sell  the  commodities  affected,  and  thereby  start  new  changes 
in  business  prosperity.  With  the  latter  changes  the  process  begins 
anew.  Prices  once  more  undergo  an  uneven  readjustment,  pros- 
pects of  profits  become  brighter  or  darker,  business  prosperity  waxes 
or  wanes,  prices  feel  the  reflex  influence  of  the  new  business  situa- 
tion,— and  so  on  without  end.    .    .    . 

Prices,  then,  form  a  system — a  highly  complex  system  of  many 
parts  connected  with  each  other  in  diverse  ways,  a  system  infinitely 
flexible  in  detail,  yet  stable  in  the  essential  balance  of  its  interrela- 
tions, a  system  like  a  living  organism  in  its  ability  to  recover  from 
the  serious  disorders  into  which  it  periodically  falls.  The  most 
significant  fact  about  the  system  of  prices,  however,  is  the  function 
it  performs  in  the  economic  life  of  nations.  It  serves  as  a  social 
mechanism  for  carrying  on  the  process  of  providing  goods.  For 
prices  are  the  means  which  make  possible  the  elaborate  exchanges, 


THE  PRICE  SYSTEM  51 

and  the  consequent  specialization,  which  characterize  the  modern. 
world.  They  are  the  source  from  which  family  income  is  derived, 
and  the  means  by  which  goods  are  obtained  for  family  consumption; 
for  both  income  and  cost  of  living — the  two  jaws  of  the  vice  in  which 
the  modern  family  is  squeezed — are  aggregates  of  prices.  Prices  also 
render  possible  the  rational  direction  of  economic  activity  by  account- 
ing, for  accounting  is  based  upon  the  principle  of  representing  all 
the  heterogeneous  commodities,  services,  and  rights  with  which  a 
business  enterprise  is  concerned  in  terms  of  money  price.  Most 
important  of  all,  the  margins  between  different  prices  within  the 
system  hold  out  that  hope  of  pecuniary  profit  which  is  the  motive 
power  that  drives  our  business  world. 

The  making  and  distributing  of  goods  by  the  elaborate  modern 
methods  requires  highly  skilled  direction.  On  the  technical  side 
the  work  is  planned  by  and  executed  under  the  supervision  of  civil, 
mechanical,  mining  and  electrical  engineers,  designers,  industrial 
chemists,  efficiency  experts,  etc.  These  are  the  men  who  know  how 
to  extract  raw  materials,  refine  and  manufacture  them,  devise  and 
operate  machinery,  organize  working  forces — in  short,  the  men  who 
know  how  to  secure  the  physical  efficiency  of  economic  effort.  By 
applying  the  results  and  the  methods  of  science  to  the  everyday  work 
of  the  world,  they  have  led  the  rapid  advance  in  the  technique  of 
production  of  which  we  feel  so  proud. 

But  in  no  country  in  the  world  are  these  technical  experts  al- 
lowed free  scope  in  directing  the  work  of  providing  material  goods. 
Higher  authority  is  assigned  by  the  money  economy  to  another  class 
of  experts,  business  men  who  are  skilled,  not  in  making  goods,  but 
in  making  money.  As  an  employee  of  the  business  man,  the  en- 
gineer must  subordinate  his  interest  in  mechanical  efficiency  to  his 
superior's  interest  in  profitable  investment.  The  chief  role  in  di- 
recting what  use  shall  be  made  of  the  country's  natural  resources, 
machinery,  and  labor  is  therefore  played  by  its  enterprisers 

Business  cycles,  then,  make  their  appearance  at  that  stage  of 
economic  history  when  the  process  of  making  and  distributing  goods 
is  organized  chiefly  in  the  form  of  business  enterprises  conducted  for 
profit. 

This  form  of  economic  organization  has  been  gradually  developed 
out  of  earlier  forms  by  successive  generations  of  men  who  have 
thought  to  gain  some  advantage  from  each  successive  step.  But 
the  complicated  machinery  of  the  money  economy  has  never  been 
Vvholly  under  the  control  of  its  inventors.  The  workings  of  the 
system  are  not  fully  mastered  even  by  the  present  generation  of 
business  men,  and  recurrently  the  financial  machinery  inflicts  grave 
suffering  upon  us  who  use  it.    Because  we  have  not  learned  how  to 


52        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

prevent  costs  from  encroaching  upon  profits  and  strmgency  from 
accumulating  in  the  money  markets,  how  to  keep  steady  the  con- 
struction of  new  industrial  equipment,  how  to  control  the  market 
capitalization  of  business  enterprises,  and  how  to  avoid  spasmodic 
expansions  and  contractions  of  credits — because  our  theoretical 
knowledge  and  our  practical  skill  are  deficient  regarding  these  tech- 
nical matters,  we  cannot  maintain  prosperity  for  more  than  a  few 
years  at  a  time. 

Hon,  A,  C,  Miller:  Industries  in  Readjustment  * 
(pp.  309,  321) 

Of  all  the  financial  difficulties  confronting  the  country  at  the 
close  of  the  war  the  price  situation  is,  in  a  business  way,  the  most 
serious  and  the  one  calling  for  the  most  immediate  correction.  For- 
tunately for  the  United  States,  this  situation  is  not  confined  to  us. 
The  whole  commercial  world  has  been  involved  in  a  series  of  ex- 
traordinary price  disturbances  growing  out  of  the  war.  While  the 
situation  is  worse  in  some  countries  than  in  others,  it  is  serious  in 
all.  The  general  dimensions  and  the  gravity  of  it  are  sufficiently 
disclosed  in  the  broad  statement  that,  in  the  course  of  the  four 
years  of  the  war,  the  world  level  of  prices  has  risen  by  one  hundred 
per  cent.  In  some  countries  prices  mean  depreciated  paper  prices, 
in  others  gold  prices,  but  in  all  an  increase  has  been  experienced  that 
makes  the  problem  of  price  rectification  one  of  urgency  everywhere. 

It  cannot  be  emphasized  too  insistently  that  economic  life  can 
never  be  normal  and  that  business  conditions  can  never  be  safe  until 
prices  in  leading  world  markets  work  their  way  back  to  some  sort  of 
a  stable  or  normal  level  adjusted  to  conditions  of  national  and 
international  demand  and  supply,  as  these  will  be  when  industry  and 
trade  among  the  nations  have  recovered  from  the  shattering  effects  of 
the  war  and  have  resumed  something  that  can  be  called  a  normal 
course.   .    .    . 

The  more  the  matter  is  pondered,  therefore,  the  more,  I  believe, 
the  heart  of  our  national  after-war  business  and  financial  problem 
will  be  found  in  the  price  situation.  There  are  many  other  factors 
— such  as  wages,  taxes,  interest  rates — but  none  that  is  comparable 
in  its  importance  to  the  price  situation  nor  unaffected  by  it.  If  our 
price  situation  is  quickly  cleared  up  by  deflation,  wages  and  taxes 
may  be  expected  to  adjust  themselves  to  the  altered  conditions.  In- 
dustrial enterprise  can  then  make  its  calculations  on  something  like 

*  Reprinted  by  permission  of  Annals  of  the  American  Academy  of  Po- 
litical ayid  Social  Science,  Vol.  LXXXII,  No.  171,  March,  1919,  p.  309. 


THE  PRICE  SYSTEM  S3 

a  stable  or  normal  basis  and  the  period  of  post  war  readjustment 
need  have  little  terror  for  us.    The  whole  world  is  inflated. 

A  great  opportunity,  therefore,  awaits  the  country,  which  is  the 
first  to  be  able  to  begin  marking  down  its  prices  toward  peace  levels. 
The  world  needs  us  and  what  we  can  produce.  It  needs  copper, 
cotton,  steel,  machinery  and  many  other  things.  Some  of  these  it 
will  take  at  any  prices  but  it  will  take  much  if  our  prices  are  such 
as  to  invite  foreign  demand,  and  we  need  give  little  attention  to 
artificial  methods  of  taking  up  the  slack  in  the  labor  market  and 
otherwise  stabilizing  industrial  conditions,  if  we  take  up  promptly 
and  proceed  vigorously  with  the  solution  of  the  price  situation. 

Walton  H.  Hamilton:  The  Price-System  and  Social 

Policy  * 

It  is  therefore  over  money-making  that  the  price-system  exercises 
its  strongest  tyranny j-j-  and  for  this  reason  it  is  necessary  to  study 
quite  particularly  this  influence. 

Let  us  begin  with  the  group  charged  with  the  management  of 
independent  business  ventures.  To  them  success  or  failure  is 
v/ritten  in  the  balance  sheet.  They  find  their  activities  hemmed 
in  between  the  prices  of  the  goods  and  services  which  they  buy  and 

*  From  the  Journal  of  Political  Economy,  Januarj'-,  1918.  Reprinted  by- 
permission  of  the  author  and  the  University  of  Chicago  Press. 

t  To  insist  at  length  upon  the  price-system  as  determining  one's  activi- 
ties, habits,  and  mode  of  life  is  insisting  upon  the  obvious.  But  in  our 
thought,  and  even  more  in  collective  endeavor,  its  constraints  upon  us  are 
not  always  clearly  recognized.  Offhand  we  think  of  the  state  as  the  in- 
stitution which  exercises  the  greatest  restraint  upon  our  actions.  But  a 
moment's  thought  shows  how  inferior  its  power  is  to  that  of  the  price- 
system.  If  space  were  available,  it  would  be  interesting  to  make  a  detailed 
comparison  between  the  two  institutions,  with  attention  to  the  source  of 
the  power  of  each,  the  way  in  which  it  is  used,  the  range  of  activities 
affected,  the  ease  with  which  their  respective  decrees  are  enforced,  the 
relative  amounts  of  friction  involved  in  the  enforcement,  the  speed  and 
continuity  with  which  they  reflect  changed  conditions,  etc.  But  the  com- 
parison is  easy  and  the  reader  can  make  it  for  himself.  It  is  of  note 
that  neither  in  the  Middle  Ages  nor  in  our  own  times  has  the  state  been 
the  institution  of  dominant  authority.  For  the  earlier  period  that  place 
was  held  by  the  Holy  Catholic  church ;  in  our  system  it  is  taken  by  the 
price-system.  In  passing  one  cannot  but  mention  the  peculiar  position 
into  which  the  classical  economists  fell  in  discussing  the  price-system 
and  the  state.  In  trying  to  show  the  small  place  which  the  state  should 
have  in  social  matters  they  appealed  to  the  dominance  of  the  price- 
system.  But  the  latter  was  regarded,  not  an  institution,  but  as  a  mani- 
festation of  a  natural  order.  Thus  they  denied  importance  to  one  in- 
stitution by  using  a  second  institution  whose  institutional  character  they 
did  not  recognize. 


54       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

those  of  the  articles  which  they  sell.     By  grace  of  high  prices 
or  low  costs  the  business  adventurer  derives  from  his  concern  a 
surplus;  by  dint  of  low  prices  or  high  costs  he  has  a  deficit  thrust 
upon  him.     Unless  a  surplus  appears,  at  least  for  its  owner,  the 
enterprise  ceases  to  be.     If  it  is  small,  his  position  is  precarious; 
as  it  increases,  there  appears  room  for  discretion,  for  personal  judg- 
ment, for  individual  whim.     If  one  would  increase  output,  manu- 
facture a  new  product,  introduce  a  new  technique,  change  the  or- 
ganization of  labor,  place  his  £;oods  in  new  markets,  build  a  new 
plant,  or  engage  in  a  gigantic  advertising  venture,  experts  familiar 
with  the  matters  in  question  are  consulted.  They  are  asked,  however, 
not  for  decision,  but  for  advice.     Their  opinions  are  pertinent  to, 
rather  than  sufficient  for,  judgment.     They  have  to  be  translated 
into  terms  of  dollars  and  cents,  and  final  choice  is  reserved  to  those 
who  know  far  m.ore  of  the  mysteries  of  the  pecuniary  calculus  than 
of  the  intricacies  of  the  productive  process.    If  restraint  came  only 
from  immediate  prices  the  enterpriser  might  break  them  down  and 
find  economic  freedom  for  himself.     But  the  costs  of  many  goods 
which  he  uses  are  but  local  manifestations  of  prices  of  goods  used  in 
the  production  of  a  thousand  products.     Over  selling  prices  his 
control  seems  somewhat  greater,  but  here  there  are  also  many  re- 
straints.    If  he  has  competitors,  he  dare  not  go  much  higher  than 
they  lest  he  be  left  without  a  m.arket.    If  he  has  none,  the  double 
possibility  of  substitutes  and  of  potential  competition  makes  high 
prices  less  inviting.     If  his  goods  be  other  than  a  prime  necessity, 
there  is  a  chance  of  his  market  being  swept  away  by  the  preference 
of  the  consumer  for  the  satisfaction  of  some  want  other  than  that 
to  which  his  product  ministers.     If  he  sells  to  other  producers  the 
upper  limit  of  price  is  quite  a  rigid  one.    Hemmed  in  thus  he  may 
seek  to  escape  by  increasing  the  amount  of  his  sales.     But  price- 
lowering  or  extensive  advertising,  essential  to  this  result,  are  alike 
expensive.    They  can  succeed  only  within  definite  limits,  for  he  has 
to  compete  against  the  allurements  of  other  sellers.     At  best  only 
the  exceptional  concern  can  expect  an  extraordinary  share  of  the 
trade. 

To  this  fitful  tyranny  of  the  price-system  over  the  enterpriser 
many  conditions  peculiar  to  the  industrial  system  contribute.  The 
wide  variety  of  the  goods  offered  on  the  market  presents  to  the 
consumer  an  endless  choice.  The  result  is  that  an  increasing  part  of 
the  industrial  system  is  engaged  in  producing  goods  which  satisfy  a 
capricious  demand.  Since  establishments  are  built  and  stocked  with 
equipment  to  turn  out  a  predetermined  volume  of  goods  at  the  lowest 


THE  PRICE  SYSTEM  55 

cost  per  unit,  costs  do  not  decrease  in  proportion  to  diminished  sales. 
While  it  is  important  to  keep  sales  uniformly  large,  in  few  cases  is 
this  possible,  for  the  fixed  establishment  is  sadly  at  variance  with  the 
rhythm  of  activity  in  the  business  system.  When  trade  is  at  a 
low  ebb,  small  sales,  attended  by  meager  receipts,  demand  the  ut- 
most attention  to  the  dictates  of  price.  When  the  flood  time  of  the 
cycle  is  on,  there  is  no  surcease,  for  the  manager  sees  the  double 
danger  lurking  in  rapidly  rising  costs  and  in  the  inevitable  depres- 
sion whose  seed  prosperity  is  sowing.  An  additional  danger,  insep- 
arable from  industrial  expansion,  has  left  the  entrepreneur  face 
to  face  with  a  striking  dilemma.  If  he  expands  his  business  to  keep 
pace  with  rapidly  growing  population  and  wealth  and  the  demand 
for  better  quality  and  larger  variety  in  his  goods,  he  is  assured  both 
economic  survival  and  a  more  secure  position.  If  he  fails  to  meet 
the  enlarged  and  more  particular  demands,  he  is  destined  to  suc- 
cumb to  his  competitor.  To  accept  the  first  alternative  he  must 
usualty  find  in  his  own  dividends  funds  for  expansion,  which  in- 
creases his  slavery  to  a  price-system  subject  to  the  caprice  of  the 
business  cycle. 

An  even  more  immediate  incentive  to  obedience  proceeds  from 
the  corporate  character  of  business  organization.  The  impersonal 
nature  of  the  corporation,  the  theoretical  separation  of  ownership 
and  management,  and  the  extreme  liquidity  of  securities  combine 
to  make  responsible  managers  particularly  sensitive  to  immediate 
price-motives.  The  securities  are  usually  owned  by  the  members 
of  a  body  more  numerous  than  the  management,  living  broadcast 
throughout  the  country.  Few  of  them  have  any  personal  knowl- 
edge of  the  concern,  its  organization,  its  personnel,  its  technical 
processes,  or  the  living  and  working  conditions  of  its  laborers.  The 
summary  of  the  economic,  social,  and  moral  condition  of  the  busi- 
ness is  usually  presented  to  them  in  the  double  form  of  the  value 
of  securities  and  the  rate  of  dividends.  If,  by  grace  of  management, 
a  generous  dividend  is  forthcoming,  inquisitive  owners  are  not  likely 
to  probe  far  into  the  how  and  why,  and  those  in  control  are 
assured  a  generous  extension  of  power.  If  it  fails,  those  who  have 
purchased  in  securities  merely  impersonal  pecuniary  incomes  are 
not  likely  to  tolerate  excuses  about  managerial  concern  for  social 
good.  Their  interest  in  charity  is  too  personal  and  too  precious  to 
be  delegated  to  men  who  draw  salaries  for  posing  as  business  ce- 
lestials. If  by  some  mischance  a  management  is  elected  which 
proves  incurably  altruistic,  the  stock  market  offers  an  easy  egress  to 
the  analytically  minded  who  do  not  wish  to  mix  uplift  with  invest- 
ments. If,  as  is  more  probable,  particular  stockholders  object  on 
moral  grounds  to  the  policy  of  the  management,  they  may  transfer 


56       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

their  ownership  to  industries  more  to  their  liking.  The  change 
will  soothe  the  individual  conscience  without  interfering  with  the 
practices  of  the  concerns  involved.*  If  managers  succeed  beyond 
their  expectations,  their  very  success  evokes  the  law  of  capitalization 
and  leads  to  an  increase  in  the  value  of  the  investments  upon  which 
in  future  they  are  expected  to  pay  dividends.  Thus  success,  instead 
of  bringing  relief,  merely  renews  the  slavery.  Because  well-connected 
businesses  pay  dividends  regularly,  the  management  is  constantly 
under  the  tem_ptation  to  subordinate  to  the  amenities  of  the  present 
projects  which  promise  much  in  future  to  themselves,  to  the  concern, 
and  to  the  community.  The  constant  opportunities  of  managers 
to  speculate  in  the  stocks  of  their  own  concerns  do  not  diminish  this 
temptation. 

The  response  of  enterprisers  to  the  immediate  pressure  of  prices 
involves  more  than  the  temporary  well-being  of  the  enterprises 
they  manage.  If  the  ultimate  interests  of  the  managers,  the  business 
ventures  themselves,  the  laborers  the}''  employ,  and  the  commimities 
they  supply  are  in  accord  with  the  demands  of  immediate  money- 
making,  they  are  likely  to  be  served.  If  the  lack  of  harmony  is 
inconsiderable,  the  more  immediate  may  be  sacrificed  to  the  less 
immediate  value,  provided  business  management  and  ownership  are 
relatively  stable.  If  they  are  out  of  harmony,  the  less  immediate 
interests  of  group  and  community  are  likely  to  be  sacrificed.  No 
matter  how  promising  a  change  in  working  conditions,  no  matter 

*  To  sell  an  equity  in  a  business  which  does  not  satisfy  one's  morals 
seems  a  relic  of  an  antiquated  individualism,  yet  any  one  of  us  would 
do  it.  We  object  to  renting  property  for  saloon  purposes,  to  owning 
stock  in  patent-medicine  concerns,  to  enjoying  dividends  made  possible 
by  child  labor,  overwork  of  emplo3'ees,  or  forcing  the  incidence  of  in- 
dustrial risk  upon  them.  Regarding  the  issue  as  one  of  personal  morality, 
we  wash  our  hands  by  selling  our  holdings  to  others  whose  particular 
scruples  do  not  apply  to  the  objectionable  practices.  Yet  such  sales 
merely  salve  individual  conscience ;  they  contribute  nothing  to  an  elimi- 
nation of  the  objectionable  practices.  In  fact  the  investment  market  has 
been  organized  in  such  a  way  as  to  permit  an  easy  gravitation  of  equities 
in  property  toward  those  whose  consciences  are  best  fitted  for  their 
ownership.  One  endowed  with  a  gift  of  narrative  might  write  a  satirical 
story  about  a  group  of  very  virtuous  individuals,  each  of  whom  hap- 
pened to  be  left  with  a  minority  interest  in  a  concern  that  engaged  in 
practices  of  which  he  disapproved.  Each  would  set  about  ridding  himself 
of  his  investment.  Such  a  redistribution  of  equities  would  be  effected 
that  each  would  come  into  possession  of  a  property  whose  uses  met  his 
scruples.  Thus  the  consciences  of  all  would  be  freed  from  their  burdens 
and  the  objectionable  practices  would  be  left  intact.  The  point  is  that 
it  is  futile  to  attempt  to  solye  social  problems  by  appealing  from  the 
price-system  to  personal  morality.  Such  problems  can  be  effectively  dealt 
with  only  through  changes  in  the  plane  of  competition.  Hence  they  call 
ior  social  morality  and  collective  activity. 


THE  PRICE  SYSTEM  57 

what  the  possibility  of  a  proposed  law,  if  it  threatens  serious  inter- 
ference with  immediate  gain  it  is  damned.  Impinged  upon  by  condi- 
tions which  they  cannot  control,  business  men  have  no  alternative 
but  to  attempt  to  increase  current  dividends  by  similarly  impinging 
upon  prices  not  strong  enough  to  resist  their  impact.  To  each  the 
flood  time  of  the  cycle  represents  normal  conditions;  each  can  be 
depended  upon  to  favor  policies  promising  wider  markets,  further 
exploitation  of  natural  resources,  and  an  acceleration  in  the  rate  of 
industrial  expansion.  These  are  the  essential  demands  of  the  group 
as  they  have  found  expression  in  social  development.  It  is  signifi- 
cant that  they  arise,  not  in  the  desires  of  business  men,  but  in  the 
institutions  to  which  they  must  conform,  that  their  end  is  not  to 
advance  consciously  appreciated  group-interests  but  to  conserve  and 
increase  current  incomes.* 

An  extended*  argument  seems  unnecessary  to  show  the  response 
of  professional  and  laboring  men  to  similar  demands  for  immediate 
income.  If  with  the  former  it  seems  somewhat  less  whole-hearted, 
it  is  because  the  lurking  traditions  of  the  craft  period  and  the 
better-formulated  codes  of  professional  ethics  more  rigidly  confine 
the  motive.  But  the  establishment  of  bounds  rather  determines  the 
nature  than  takes  away  the  intensity  of  competition.  Only  where 
incomes  are  fixed  and  personal  effort  and  direct  pecuniary  reward 
are  divorced  do  we  find  a  profound  disregard  to  immediate  pecuniary 
values.  Professional  men  and  laborers  alike  have  a  perishable 
commodity  to  sell  and  are  compelled  to  sell  it  in  an  irregular  and 
capricious  market.  The  skilled  laborer  shares  with  the  professional 
man  the  further  disadvantage  of  having  to  dispose  of  a  highly 
specialized  product.  The  nature  of  service  and  the  character  of 
the  market  beget  a  careful  regard  for  current  values.  To  the 
laborer  especially  income  is  a  regular  flow;  his  outgo  has  usually 
been  arranged  in  strict  conformity  with  that  fact.  Many  times 
provision  can  be  made  for  a  bare  month  ahead ;  in  no  inconsiderable 
number  of  cases  the  span  of  economic  calculation  runs  from  Satur- 
day night  to  Saturday  night.  The  failure  of  an  appearance  of 
the  pay  envelope  leaves  him  without  the  means  of  support  and 
may  threaten  his  future  security.    The  opportunities  of  his  children 

*  It  is  of  note  that  the  business  man  obeys  the  laws  of  the  institutions 
under  which  he  lives  rather  than  personal  inclination.  The  tendencies  af- 
fecting the  development  of  society  thus  find  expression  through  him  rather 
than  take  their  initiative  from  him.  However,  it  must  be  confessed  that 
in  the  industrial  system  positions  and  their  occupants  are  brought  together 
by  a  selective  process,  and  that  managerial  roles  are  usually  played  by 
men  who,  either  by  inclination  or  by  training,  are  able  to  brush  non- 
pecuniary  considerations  aside  and  to  act  quickly.  Their  wills  are  usually 
in  harmony  with  that  of  the  institutions  governing  their  actions. 


58        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

for  development,  for  health,  even  for  life  itself,  depend  upon  un- 
interrupted income.  We  may  therefore  expect  the  laborer  and  in 
lesser  degree  the  professional  man  to  take  much  conscious  thought 
about  current  income. 

It  is  apparent,  therefore,  that  the  class  which  lives  under  the 
continued  and  fitful  sway  of  the  price-system  contains  the  great 
mass  of  mankind.  To  realize  their  ideals,  to  carry  through  their 
schemes,  to  thrive  economically,  even  to  continue  to  exist,  they 
must  be  responsive  to  the  dictates  of  money-making.  It  matters 
not  how  unselfish  the  individual,  how  unmercenary  his  motives, 
how  great  his  concern  for  literature,  philosophy,  or  philanthropy,  he 
must  live  in  a  pecuniary  society;  he  must  attain  his  ends  by 
selling  and  purchasing  goods  and  services.  Before  he  can  write 
poetry,  establish  schools  to  teach  art,  or  send  forth  missionaries  to 
make  converts  to  the  abolition  of  the  price-system,  he  must  obey 
its  commands.  His  aspirations  may  all  be  spiritual,  he  may  rebel 
at  the  existence  of  the  institution,  but  in  the  end  no  choice  is  left 
save  obedience.*  This  is  not  because  he  is  money-mad,  nor  because 
money  motivates  his  activities,  but  because  he  lives  in  a  society  so 
organized  that  pecuniary  income  is  a  definite  and  exact  summary 
of  his  varied  and  complex  assortment  of  motives.  The  constraint 
to  subordinate  welfare  to  wealth  proceeds  neither  from  an  instinct 
nor  a  morbid  desire,  but  from  the  nature  of  the  social  organization. 

The  direct  dominance  of  the  price-system  over  thought  and 
action  is  upheld  by  a  number  of  social  conventions.  This  indirect 
support  is  so  important  that  an  enumeration  of  the  more  influential 
of  these  is  necessary  to  an  adequate  appreciation  of  its  power  to 
shape  conduct. 

The  first  and  most  obvious  of  these  conventions  is  the  high 
measure  of  public  esteem  accorded  the  business  man,  the  member 
of  society  who  is  the  most  prone  to  reduce  his  universe  with  all  its 
contents,    measurable   and   incommensurable,   to   pecuniary   terms. 

*  Perhaps  no  question  of  theoretical  interest  in  economics  has  pro- 
voked more  confusion  than  that  of  the  incentives  to  economic  activity. 
To  insist  with  the  classicists  upon  individual  self-interest  as  the  sole 
origin  of  conduct,  or  with  the  sociologists  upon  environment  as  its  ex- 
clusive source,  is  to  make  a  half-truth  do  duty  for  the  whole.  The  factors 
are  complementary  rather  than  antagonistic;  it  is  always  the  individual 
who  acts,  and  egocentricity  makes  interest  his  dominant  motive,  but  he 
always  acts  within  a  situation  which  infuses  the  content  into  his  activity. 
Bankers  and  physicians  are  alike  impelled  by  self-interest,  but  their  actions 
are  governed  by  very  different  codes  of  professional  ethics.  Medieval 
guildsmen  and  modern  unionists  alike  respond  to  self-interest,  but  they  act 
within  very  different  institutional  systems.  Since  the  concern  of  this 
article  is  primarily  with  the  content  of  group-activity,  its  stress  neces- 
sarily falls  upon  institutions. 


THE  PRICE  SYSTEM  59 

In  America  until  recently  there  has  been  no  recognized  aristocracy, 
no  clergy  with  clearly  defined  traditions,  no  professional  class  of 
assured  status,  no  group  with  the  prestige  which  comes  from 
established  position.  Since  the  first  requisite  of  development  seemed 
to  be  an  industrial  system,  with  its  indispensable  business  comple- 
ment, business  men  came  into  this  strategic  position  unchallenged. 
In  popular  thought  it  was  they  who  made  possible  the  utilization 
of  natural  resources;  they  who  gave  productive  investment  to 
savings;  they  in  whose  establishments  labor  found  remunerative 
employment.  The  enterprises  which  they  founded  became  the 
dispensers  of  blessings  to  the  landowner,  the  merchant,  the  local 
newspaper,  and  the  neighborhood  church.  It  was  through  their 
new  ventures  that  the  community  grew,  amassed  wealth  and  popula- 
tion, throbbed  with  industrial  life,  and  assumed  full-fledged  urban 
pretentiousness.  In  view  of  these  services  the  opinions  of  the  lord 
of  trade  found  a  ready  hearing.  If  we  are  prone  to  laugh  at  him 
as  an  accredited  critic  of  tobacco  and  soap  in  newspaper  advertise- 
ments, our  feelings  are  more  serious  when  we  remember  that  to 
the  great  majority  of  men  he  is  competent  to  speak  with  equal 
authority  upon  affairs  of  state  and  the  immortality  of  the  soul. 
Small  wonder  that  we  regard  him  as  capable  of  advising  us  in  mat- 
ters of  social  policy. 

A  second  convention  favorable  to  the  dominance  of  immediate 
pecuniary  values  is  our  habit  of  using  the  dollar  as  the  measure  of 
all  worth  and  all  attainment.  In  more  stable  communities  the 
institutions  which  represent  the  various  aspects  of  life  group 
themselves  in  a  varied  and  rich  social  organization.  There  the 
individual  is  appraised  in  terms  of  such  standards  as  birth,  religious 
belief,  education,  intelligence,  political  opinion,  and  personal  moral- 
ity, and  the  answers  obtained  are  all  used  in  giving  him  his  place 
in  the  community.  If  he  does  not  care  to  be  an  outcast  he  must 
conform  to  the  dictates  of  these  standards.  But  under  industrialism 
it  has  been  impossible  to  use  at  all  adequately  these  rich  standards 
of  social  rating.  Throughout  the  greater  part  of  America  two  gen- 
erations have  witnessed  the  transition  from  an  agricultural  to  an 
industrial  system,  and  the  newer  life  has  been  adequately  organized 
only  in  its  immediately  industrial  aspects.  The  transition  has 
everywhere  been  accompanied  with  a  high  degree  of  flux.  In  small 
villages  the  names  of  firms  still  change  with  kaleidoscopic  quickness. 
On  the  investment  market  securities  change  hands  even  more  rapidly. 
In  the  city  propinquity  is  no  breeder  of  neighborliness,  and  the  roof 
of  an  apartment  house  does  not  make  of  its  numerous  occupants  a 
community.  Labor  is  ''on  the  move,"  ever  ready  to  take  "the  main 
chance."    Amid  the  rapid  whirl  of  industrialism  one  gets  into  the 


6o       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

habit  of  considering  relations  but  for  the  day.  Here  to-day,  there 
to-morrow,  the  identification  of  individual  with  industrial  establish- 
ment, with  community,  and  with  peculiar  schemes  of  thinking  and 
living  has  nothing  in  common  save  the  blue  sky  above  and  the 
pecuniary  income  ahead.  In  view  of  the  necessity  of  forming  judg- 
ments within  this  chaotic  society,  it  is  inevitable  that  the  dollar 
should  become  the  arbiter  of  values.  It  serves  well  this  function 
because,  to  those  who  use  it,  it  is  far  more  than  mere  income. 
When  new  sections  of  the  country  were  inviting  settlement,  when 
older  ones  were  ready  to  welcome  machine  industry,  when  urban 
centers  were  springing  up  in  the  wilderness,  and  when  new  occupa- 
tions were  beckoning  to  youth,  the  income  ahead  typified  great 
adventure;  it  epitomized  in  one  lucid  expression  the  promises  and 
the  fears  of_a  lifetime. 

A  third  convention,  intimately  associated  with  the  one  just 
discussed,  is  the  use  of  pecuniary  display  as  a  means  of  attaining 
personal  distinction.  In  an  impersonal  society  such  as  ours  only 
the  exceptional  man,  when  disposing  of  his  services,  is  asked  about 
his  ancestry,  his  political  views,  his  moral  scruples,  or  the  funda- 
mental nature  of  his  subjective  cosmos.  In  supplying  his  wants 
one  purchases  the  services  of  others  in  the  form  of  impersonal  goods, 
and  from  them  he  can  ask  no  questions  about  the  personal  char- 
acteristics of  their  makers.  One's  few  intimate  friends  are  drawn  to 
him  partly  by  similar  tastes,  partly  by  incomes  of  a  size  to  allow 
them  to  enjoy  the  same  opportunities  and  amusements.  The 
transitory  nature  of  acquaintance  causes  even  one's  friends  to  fail 
to  see  many  of  the  elements  of  his  life  which  stand  fully  revealed 
in  an  established  community.  Of  many  aspects  of  his  life  for 
which  he  yearns  for  approval  or  shrinks  from  disapproval  they 
can  know  only  what  he  tells  them.  Friends,  too,  are  few  in  number, 
far  fewer  than  he  would  like  as  a  personal  audience.  The  individual 
within  him  craves  recognition  even  from  the  unknown  crowds 
against  which  he  jostles  every  day.  As  he  goes  to  and  fro  upon  the 
cars,  as  he  frequents  restaurants,  as  he  haunts  the  theaters  in  search 
of  vicarious  companionship,  he  desires  to  be  accounted  the  equal  of 
any.  To  this  end  he  must  use  easily  recognized  marks  of  distinction. 
But  the  prestige  of  ancestry  reveals  itself  in  no  peculiar  facial 
expression;  kind  hearts  cannot  be  worn  upon  coat  sleeves;  erudi- 
tion is  not  always  knit  into  the  brow;  and  even  the  cloth  is  not  an 
infallible  index  to  inward  piety.  But  pecuniary  position  can  be 
donned  with  one's  clothes;  it  can  exhibit  itself  in  the  outward  form 
of  one's  living;  it  can  display  itself  in  the  brilliance  of  entertain- 
ment. Even  if  unattainable,  it  may  perchance  be  feigned,  which,  if 
successful,  is  just  as  well.    Pecuniary  display  thus  serves  to  give 


THE  PRICE  SYSTEM  6i 

one  the  satisfaction  which  otherwise  he  would  secure  from  favorable 
appraisals  in  terms  of  more  personal  standards.  Small  wonder  that 
where  industrialism  is  dominant  one  gets  into  the  habit  of  regard- 
ing pecuniary  income  as  the  one  sure  way  to  personal  distinction. 

A  fourth  convention,  perhaps  implicit  in  those  which  have  been 
mentioned,  is  that  of  allowing  processes  of  thought  to  be  dominated 
by  business  habits.  In  the  industrial  environment  the  merchant 
cannot  mix  gossip  with  his  sales;  he  has  no  leisure  to  discover  the 
views  of  his  employees  upon  the  question  of  apostasy;  he  cannot 
appraise  inefficient  employees  as  "chips  off  the  old  block."  He 
comes  into  contact  with  many  men;  he  engages  in  many  transactions; 
he  must  find  standards  for  business  judgments.  He  must  list  and 
label  many  persons  and  values;  it  must  be  done  with  dispatch;  it 
must  be  done  accurately.  He  has  a  concern  for  his  own  business 
reputation,  and  he  knows  that  at  the  bank  and  in  Bradstreet's  he 
himself  is  rated  in  purely  pecuniary  terms.  For  his  own  ends  the 
pecuniary  calculus,  similarly  used,  never  fails  him.  In  view  of  his 
habituation  to  it  in  business  it  is  natural  that  he  should  extend  its 
domain  to  cover  the  values  of  his  social  life.  As  issues  are  presented 
to  him,  as  proposals  of  changes  in  social  arrangements  come  and  go, 
as  values  strive  for  the  dominance  of  his  mind,  he  must  catalogue 
and  appraise  them.  To  that  end  pecuniary  standards  are  tangible, 
intelligible,  and  lend  themselves  to  even  the  most  elementary  proc- 
esses of  thought.  Its  judgments  belong  to  the  here  and  now,  not 
to  the  far-off  half-real  things  which  may  or  may  not  be.  It  fits 
the  needs  of  a  world  whose  primary  concern  must  be  with  the  imme- 
diate problem  of  making  a  living  to-day.  To  use  any  other  standard 
in  measuring  the  would-be  tendencies  in  social  development  would 
contradict  the  universe  in  which  he  leads  his  life. 

If  the  anaylsis  has  been  correct,  a  response  to  immediate  pe- 
cuniary interest  has  greater  influence  upon  the  conduct  of  individuals 
than  a  consciousness  of  their  more  ultimate  interests  as  members  of 
competing  groups.  Thus  the  first  part  of  the  double  task  with 
which  this  argument  is  concerned  has  been  fulfilled.  But  its  very 
truth  seems  to  deny  the  possibility  of  establishing  the  second  thesis, 
that  out  of  these  responses  to  individual  interest,  so  diverse  and  so 
contradictory,  a  coherent  social  development  leading  to  economic 
concentration  has  sprung.  For  evidently  the  totality  of  incomes  is 
not  without  limit,  and  in  furthering  his  own  interests  one  might 
be  expected  to  provoke  opposition  from  others  by  encroaching  upon 
their  possibilities  of  pecuniary  gain.  Accordingly  development  might 
be  expected  to  reveal  chronic  vacillation,  arrested  growth,  and  pro- 
tracted anarchy. 

While  it  is  useless  to  deny  that  to  an  extent  this  has  been  true, 


62        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  opposition  of  conscious  pecuniary  interests  has  been  more  ap- 
parent than  real.  The  antithesis  is  resolved  by  a  consciousness  of 
a  real  or  apparent  harmony  between  the  immediate  pecuniary  inter- 
ests of  the  several  industrial  groups.  The  source  of  this  identity  of 
interests  is  to  be  found  partly  in  the  stage  of  our  development, 
partly  in  certain  features  peculiar  to  our  social  organization. 

Thus  far  the  industrial  life  of  this  country  has  been  characterized 
by  a  vigorous  exploitation  of  natural  resources  and  by  rapid  expan- 
sion. The  exploitative  industries  have  made  enormous  gains.  In 
their  competition  for  the  goods  and  services  essential  to  their  con- 
tinued operation  the  managers  of  these  industries  have  been  forced 
to  raise  the  prices  paid  for  cost  goods,  thus  increasing  the  incomes 
of  members  of  other  groups.  Under  expansion  increments  of  income 
are  constantly  accruing,  and  the  very  intricacy  and  delicacy  of 
the  price-system  can  be  depended  upon  to  distribute  these  among 
various  industrial  groups  with  a  more  or  less  lavish  hand.  It  may 
well  be  that  a  much  larger  share  is  appropriated  by  members  of  the 
higher  pecuniary  groups  than  by  those  of  the  lower,  but  it  is  never- 
theless true  that  the  increased  prosperity  of  the  purchaser  of  one's 
services  gives  promise  of  an  increase  in  their  market  value. 

An  even  larger  measure  of  apparent  identity  has  its  source  in 
the  organization  of  the  personnel  of  our  industries  in  the  form  of  a 
hierarchy.  At  its  apex  are  the  enterprisers,  recipients  of  large 
incomes,  endowed  with  comprehensive  industrial  powers,  and,  per- 
haps most  important  of  all,  possessed  of  unusual  control  over  public 
opinion.  Their  vantage  position  has  come  with  the  great  transforma- 
tion of  life  and  values  which  we  call  the  industrial  revolution. 
The  nature  and  scope  of  this  will  be  made  clear  by  a  brief  com- 
parison of  the  older  craft  system  and  the  newer  machine  process. 

The  craft  system  tends  to  a  diffusion  of  wealth  and  industrial 
initiative.  It  has  its  basis  in  the  tool,  whose  cost  is  small  and 
whose  utility  extends  to  an  infinitude  of  tasks.  Where  it  still 
dominates  technique,  as  in  agriculture  and  retail  selling,  productive 
establishments  are  small,  numerous,  and  widely  scattered.  The 
prevailing  type  of  organization  is  the  personal  establishment  or 
the  partnership.  Among  those  engaged  in  these  industries  there 
may  be  something  of  a  common  viewpoint,  system  of  thought,  and 
scheme  of  ideals.  Where  these  exist  they  are  unconsciously  held 
and  owe  their  strength,  not  to  communication  and  organization,  but 
to  the  influence  of  similar  working  conditions.  But  the  disorgan- 
ization attending  the  multitude  of  establishments  prevents  the  rise 
of  a  clearly  defined  group-consciousness  which  finds  expression  in 
a  concerted  program.  Nor  is  there  present  the  host  of  dependents 
who  can  be  persuaded,  at  least  for  the  moment,  that  their  interests 


THE  PRICE  SYSTEM  63 

are  identical  with  those  of  their  employers.  Lacking  means  for 
forcing  their  viewpoint  and  ideals  upon  their  own  and  other  groups, 
the  men  busied  with  the  craft  technique  are  in  positions  of  small 
strategic  importance. 

The  modern  industrial  system,  on  the  contrary,  tends  to  a  con- 
centration of  wealth  and  industrial  control.  It  has  as  its  basis  the 
machine,  which  is  a  complicated  collection  of  parts,  costing  much 
in  labor  and  accumulated  wealth,  and  useful  for  a  highly  specialized 
task.  The  specific  character  of  its  work  makes  necessary  in  a  single 
establishment  a  large  number  of  machines  differentiated  in  function. 
The  small  contribution  which  can  be  allowed  it  for  the  work  which  it 
performs  upon  a  single  unit  of  product  inhibits  its  use  in  any  save 
large  establishments.  Accordingly  plants  using  the  new  technique 
are  likely  to  be  of  immense  size,  small  in  number  and  highly 
concentrated.  Their  corporate  form  of  organization  puts  control  of 
them  in  the  hands  of  a  small  number  of  men.  This,  with  the 
small  number  of  really  large  establishments,  gives  rise  to  a  group 
differing  from  others  in  wealth,  in  industrial  function,  and  in  habits 
of  life.  The  small  number  and  the  identity  of  function  facilitate 
communication  and  lead  to  the  informal  rise  of  common  habits  of 
thought,  industrial  ideals,  and  methods  of  action.  In  time  there 
arises  among  them  a  conscious  sense  of  solidarity  of  interests.  How- 
ever much  they  compete  with  each  other,  they  are  alike  opposed 
to  legislation  or  informal  action  designed  to  increase  the  prices  of 
cost  goods.  Likewise  they  are  agreed  as  to  the  desirability  of 
any  proposal  promising  a  further  expansion  of  business.  The  ease 
of  communication  and  the  identity  of  interests  permit  these  and 
similar  beliefs  and  desires  to  find  expression  in  a  consistent  pro- 
gram. A  connection  between  the  realization  of  this  program  and  the 
dividends  which  they  regularly  expect  is  sufficient  for  its  diffusion 
in  the  much  larger  circle  of  the  owners  of  the  industries.    .    .    . 

For  reasons  such  as  these  the  diverse  responses  to  immediate 
pecuniary  necessity  by  divergent  groups  find  expression  in  a  common 
public  opinion  and  a  concerted  action.  The  promises  of  social 
innovations  may  be  differently  viewed  by  men  in  different  walks  of 
life,  and  yet  these  men  may  agree  upon  the  expediency  or  inexpe- 
diency of  adopting  them.  The  judgment  may  be  in  favor  of  a 
proposal  whose  eventual  consequences  bid  good  to  none  of  the 
groups  in  society;  it  may  be  against  a  proposal  which  promises 
general  good.  Proposals  are  not  accepted  or  rejected  upon  a  con- 
sideration of  their  nature  and  of  the  eventual  promises  which  they 
offer.  Their  fate  rests  upon  the  effects  of  their  adoption  upon  cur- 
rent pecuniary  incomes.  Those  proposals  become  aspects  of  social 
policy  whose  realization  in  action  promises  to  increase,  or  at  least 


64       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

not  to  decrease,  current  distributive  shares;  those  fail  of  inclusion, 
no  matter  what  they  eventually  promise,  whose  adoption  threatens 
immediately  dividends  or  wages. 

The  social  policy  which  the  price-system  permits  to  be  formulated 
accordingly  meets  two  requirements.  The  first  is  a  demand  for  a 
preservation  against  collective  action  seeking  to  change  conventional 
arrangements,  for  a  change  in  the  fundamental  conditions  under 
which  industry  is  carried  on  is  accompanied  by  radical  disturbance 
in  the  structure  of  prices.  These  are  manifest  in  financial  disorder, 
friction,  scrapping  of  capital,  unemployment  of  labor,  and  other  dis- 
advantages pertinent  to  the  temporary  breakdown  of  the  system. 
The  second  is  an  approval  of  a  program  of  exploitation  or  expan- 
sion which  gives  promise  of  increases  in  pecuniary  incomes.  In 
anticipation  of  these  the  members  of  all  social  groups  regard  the  dis- 
organization incident  to  enlargement  as  a  slight  inconvenience. 
Thus  the  immediate  interests  of  the  groups  unite  in  a  program 
favorable  to  the  creation  of  new  money-making  opportunities  and 
opposed  to  changes  in  institutions. 

Such  are  the  essential  features  of  the  policy  which  has  found 
expression  in  our  social  development.  It  has  aimed  consciously 
at  the  elevation  of  no  pecuniary  group  and  at  the  subjection  of 
none;  it  has  had  as  its  intent  neither  the  concentration  of  wealth 
and  economic  power  nor  the  dispossession  of  the  proletariat. 
Economic  groups  have  united  merely  to  maintain  those  conventions 
and  to  favor  those  proposals  which  have  promised  to  enlarge  old  op- 
portunities for  money-making  and  to  open  new  sources  of  wealth.  A 
continent  possessed  of  boundless  resources  and  a  marvelous  machine 
technique  which  could  turn  them  into  a  golden  stream  of  incomes 
have  impelled  a  policy  of  reckless  exploitation  and  feverish  indus- 
trial expansion.  In  this  mad  rush  most  men  have  been  reasonably 
successful  in  gaining  wealth,  and  some  have  waxed  fat  beyond  the 
wildest  dreams  of  a  less  acquisitive  age.  But  with  these  gettings 
many  things  have  come,  uninvited,  unwilled — mere  incidents  to  the 
more  conscious  process  of  drawing  dividends  and  opening  pay 
envelopes.  Among  these  have  been  the  rise  of  large-scale  industry, 
the  correlation  of  industries  into  an  articulate  system,  and  the  sub- 
ordination of  all  this  to  the  pecuniary  order.  These  together  have 
arranged  industrial  functions  in  a  scheme  graduated  according  to 
their  several  importances,  and  have  opened  opportunities  for  those 
that  have  wealth  and  power  to  have  yet  more  abundantly.  Its 
complement  has  been  a  stripping  of  the  great  mass  of  men  of 
economic  initiative  and  power  and  a  reduction  of  them  to  a  property- 
less  host  of  industrial  and  clerical  laborers.  You  may  call  this 
failure  of  the  enfranchised  many  to  make  democracy  an  economic 


THE  PRICE  SYSTEM  65 

fact  unconscious  or  conscious  as  you  will.  It  has  been  unconscious 
in  that  concentration  and  dispossession  have  been  the  intent  of  no 
social  group.  It  has  been  conscious  in  that  they  have  been  in- 
separable incidents  to  a  social  policy  which  has  sought  as  its  first 
object  the  maintenance  of  the  immediate  and  mutual  pecuniary 
interests  of  the  several  groups  which  make  up  industrial  society. 

To  summarize,  however  briefly,  the  argument  which  runs  its 
tedious  length  through  the  foregoing  pages  would  prove  an  additional 
weariness  to  the  flesh.  Its  outlines  are  by  this  time  obviously,  even 
painfully,  familiar.  Yet  a  conclusion  must  wait  upon  a  passing 
mention  of  some  of  the  more  interesting  byways  which  lead  off  from 
the  thoroughfare  which  has  been  followed.  The  more  inviting  of 
these  will  be  set  down  in  order. 

First,  if  the  foregoing  argument  is  sound,  neither  our  general 
development  nor  the  specific  aspects  of  it  have  involved  either  con- 
scious group-activity  in  its  own  less  immediate  interest  or  a  clear- 
cut  struggle  between  groups.  On  the  contrary  it  has  repeatedly 
happened  that  the  issue  has  been  between  a  more  immediate  and  a 
less  immediate  view  of  individual  and  group  needs.  Changes  in 
institutions,  in  working  conditions,  in  habits  of  living,  have  been 
pronounced  desirable  by  men  of  all  groups;  yet  the  poor  as  well  as 
the  rich  have  shrunk  from  the  immediate  penalty  incident  to  adop- 
tion. For  this  reason  the  fact  of  class  or  group  deserves  less  atten- 
tion than  it  has  received  in  the  discussion  of  economic  problems,  and 
the  institution  known  as  the  price-system  deserves  to  be  accorded 
a  place  in  the  theory  of  economic  motivation.  Needless  to  say,  this 
leads  to  a  theory  of  economic  conduct  whose  final  term  is  neither 
the  self-will  nor  the  self-interest  of  the  individual.* 

*  The  classical  theory  of  economic  conduct  has  as  its  basis  the  concept 
of  "the  economic  man."  It  is  no  exaggeration  to  say  that  this  concept  has 
been  partially  responsible  for  the  disrepute  into  which  classical  doctrine 
has  fallen  among  laymen.  Yet  the  essential  idea  in  the  concept,  the  dis- 
position of  the  business  man,  in  view  of  the  conventions  and  institutions 
about  him,  to  act  in  accordance  with  his  pecuniary  interests,  is  sound.  The 
classicists  failed  of  exact  analysis  in  assuming  personal  pecuniary  interests 
to  be  simple  and  evident  things  and  in  failing  to  note  that  they  are 
bundles  of  conflicting  values.  But  their  fundamental  error  was  in  formal 
statement.  Because  of  their  acceptance  of  the  individualistic-naturalistic 
common-sense  thought  of  the  times,  they  attributed  to  human  nature 
motivating  impulses  which  spring  in  reality  from  the  social  system.  Mod- 
ern economists,  however  loudly  they  may  exclaim  against  the  concept, 
agree  with  its  principal  implication.  It  is  peculiar  that  in  several  instances 
their  conviction  has  found  expression  rather  in  an  attempt  to  bolster  up 
the  human  nature  of  the  economic  man  than  to  associate  the  content  of 
activity  with  the  exigencies  of  life  in  a  society  organized  upon  a  pecuni- 
ary basis.  For  an  interesting  rehabilitation  of  the  economic  man  see 
Henry  R.  Seager,  Principles  of  Economics,  pp.  51-52, 


66       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Second,  the  price-system  plays  a  conservative  role  in  social 
development.  It  is  true,  as  has  been  so  ably  argued,*  that  men  do 
not  renounce  radical  programs  because  of  any  conscious  fear  that 
their  realization  will  bring  economic  disorganization  and  social  chaos. 
Yet,  if  we  were  possessed  of  the  eighteenth-century  belief  in  the 
moral  efficacy  of  man's  instincts,  we  might  argue  that  intuitively 
men  obey  just  this  restraint.  Each  is  conservative  in  action  lest 
radical  changes  sweep  away  his  income.  But  one's  incom.e  is  but 
an  aspect  of  the  price-system,  and  its  disappearance  a  mere  incident 
of  a  more  or  less  general  disintegration  of  the  price-structure.  Hence 
the  instinct  which  leads  one  to  protect  his  income  really  functions 
to  the  preservation  of  the  price-system  against  radical  changes  bring- 
ing with  them  general  economic  demoralization.  On  this  basis  one 
who  believes  in  the  system  as  ordained  can  easily  see  in  the  scheme 
of  articulated  prices  a  safety  device,  an  institution  whose  function 
is  the  preservation  of  industrialism  by  protecting  it  against  innova- 
tion. Certainly  we  may  concur  by  admitting  that  the  price-system 
imposes  restraint  upon  innovation  and  thus  gives  continuity  to  in- 
dustrial development. 

Third,  the  price-system  causes  the  less  immediate  to  wait  upon 
the  more  immediate  value.  There  was  a  time  when  social  philoso- 
phers insisted  that  the  world  had  been  so  contrived  that  the  interests 
of  all  were  best  served  by  allowing  each  to  pursue  his  own  personal 
advantage.!  Translating  this  into  their  own  thought,  economists 
found  social  interests  inseparably  associated  with  the  right  of  each 
individual  to  be  guided  by  his  own  immediate  pecuniary  interest.:|: 
Since  we  can  no  longer  accept  the  assumptions  underlying  this  con- 
fession of  economic  faith,  our  conclusion  upon  the  question  of  the 
morality  of  development  secured  in  this  way  must  take  the  form 
of  an  alternative.  So  far  as  the  long-run  interests  of  society  are  in 
harmony  with  the  immediate  pecuniary  interests  of  social  groups, 
they  are  well  looked  after.  So  far  as  they  are  contradictory  to 
these  immediate  values,  they  are  sacrificed. §     However  these  future 

*  Henry  Clay.     See  the  argument  in  the  footnote  on  p.  2>^. 

t  For  excellent  statement  of  this  theory  see  William  Blackstone,  Com- 
mentaries on  the  Law  of  England,  Book  I,  sec.  2,  and  Piercy  Ravenstone, 
A  Few  Doubts  about  the  Correctness  of  Some  Opinions  Generally  Enter' 
tained  on  the  Subjects  of  Population  and  Political  Economy,  pp.  2-3. 

tin.  this  connection  see  the  well-known  discussion  of  the  relation  of 
natural  theology  to  political  economy  in  Richard  Whately,  Introductory 
Lectures  in  Political  Economy,  pp.  99-117. 

§  In  speaking  of  the  England  of  the  new  productive  system  made  pos- 
sible by  the  machine  technique  Macaulay  once  remarked :  "Nowhere  does 
man  exercise  such  dominion  over  matter."  In  discussing  the  social  Eng- 
land created  by  the  new  technique,  a  recent  book  on  English  industrial  his- 
tory transposes  Macaulay's  words  to  read :     "Nowhere  does  matter  exer- 


THE  PRICE  SYSTEM  67 

values  may  be  separated  into  the  two  divisions,  the  prevailing  indus- 
trial order  forces  us  to  subordinate  a  conscious  consideration  of  wel- 
fare to  a  consideration  of  wealth.  It  forbids  wealth  attending  upon 
the  behests  of  welfare.* 

Fourthly  the  price-system  has  denied  to  us  a  consciously  formu- 
lated theory  of  social  development.  Collectively  we  do  not  take 
conscious  thought  for  the  morrow.  We  do  not  draw  up  schemes  of 
what  the  society  of  after-while  is  to  be  like,  devise  ways  and  means 
for  making  it  measure  up  to  these  ideals,  and  set  about  the  attain- 
ment of  our  ends  by  an  application  of  them  to  the  society  of  here  and 
now.  On  the  contrary,  we  allow  the  non-industrial  aspects  of  life, 
the  rich  and  varied  culture  which  it  contains,  and  even  the  larger 
aspects  of  our  social  arrangements  to  develop  within  the  limits  per- 
mitted by  a  continued  response  of  economic  groups  to  their  immediate 
interests.  For  good  or  for  bad  we  make  the  development  of  culture 
a  mere  by-product  of  money-making. 

At  this  point  the  argument  must  rest.  Its  function  is  exposi- 
tory, not  didactic;  positive,  not  ethical.  As  such  it  has  been  dis- 
charged. It  may  be  that  the  dominance  of  the  price-system  has 
blinded  us  alike  to  the  future  and  to  larger  current  interests,  and 
has  prevented  the  establishment  of  an  economic  and  social  order 
far  superior  to  the  one  under  which  we  live.     It  may  be,  on  the 

cise  dominion  over  man."  See  J.  L.  Hammond  and  Barbara  Hammond, 
The  Town  Laborer,  pp.  17-18. 

*  We  have  been  told  often  enough  to  know  that  there  are  no  real 
antitheses  in  hfe.  Yet  at  this  point  the  temptation  is  strong  to  contrast 
medieval  and  modern  social  policy.  In  the  ideal  of  the  former,  however 
imperfectly  it  may  have  been  realized  in  practice,  the  principle  was  clearl}-- 
established  that  wealth  must  wait  upon  welfare.  To  that  end  welfare  was 
defined,  the  means  to  its  realization  were  determined,  and  wealth-getting 
had  to  accommodate  itself  to  these.  In  terms  of  this  theory  the  prohibition 
of  usury,  the  social  position  of  the  trader,  and  the  regulation  of  in- 
dustry and  commerce  by  church,  municipality,  and  gild  are  to  be  ex- 
plained. In  modern  society  we  neither  define  welfare  nor  determine 
means  to  it  as  an  end.  Quite  consciously  we  allow  it  to  accommodate 
itself  to  the  exigencies  of  wealth-getting.  We  go  so  far  as  to  allow  the 
character  and  numbers  of  our  people  and  their  resolution  into  groups  to 
be  determined  by  the  chase  of  dollars,  despite  the  fact  that  the  welfare 
of  these  groups  is  considered  by  most  of  us  more  ultimate  than  wealth- 
getting.  It  is  of  note  that  in  determining  social  policy  the  medieval  world 
attached  great  importance  to  the  opinions  of  those  whose  concern  was 
general  and  social,  little  to  those  whose  concern  was  industrial  and  per- 
sonal. We  reverse  the  process.  The  men  whose  opinions  counted  in  the 
Middle  Ages  were  churchmen  and  scholars.  Now  the  opinion  of  the 
business  man,  whose  concern  is  particular  and  who  knows  only  a  tiny 
segment  of  social  life,  counts  for  everything.  Small  attention  is  given 
to  the  opinions  of  clergymen — even  less  to  those  of  college  professors, 
even  to  those  whose  specialty  is  the  study  of  mankind  in  his  economic 
and  social  relations. 


68       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

contrary,  thatjt  has  kept  us  from  dissipating  our  resources  in  social 
experimentation  and  has  established  a  system  as  good  as  we  could 
expect  under  the  circumstances.  It  may  be  that,  had  we  but  been 
free  from  its  immediate  pressure,  we  might  have  diffused  economic 
as  well  as  political  power.  Or  it  may  be  that  industrial  democracy 
was  attainable  only  at  the  expense  of  general  well-being.  These 
raise  interesting  and  important  questions,  but  they  are  of  ethical 
and  prophetic  import,  and  of  them  the  tangles  of  the  price-system  tell 
nothing. 


2.     CAPITALIZATION  AND  VALUE 

Thor stein  Vehlen:  The  Theory  of  Business  Enterprise  * 

(pp.  114-118) 

The  typical  (latest  and  most  highly  specialized)  instrument  of 
this  [debenture]  class  is  the  preferred  stock.  This  is  in  form  a  deed 
of  ownership  and  in  effect  an  evidence  of  debt.  It  is  typical  of  a 
somewhat  comprehensive  class  of  securities  in  use  in  the  business 
community,  in  the  respect  that  it  sets  aside  the  distinction  between 
capital  and  credit.  In  this  respect,  indeed,  preferred  stock,  more 
adequately  perhaps  than  any  other  instrument,  reflects  the  nature  of 
the  "capital  concept"  current  among  the  up-to-date  business  men 
who  are  engaged  in  the  larger  industrial  affairs. 

The  part  which  debenture  credit,  nominal  and  virtual,  plays  in 
the  financing  of  modern  industrial  corporations  is  very  considerable, 
and  the  proportion  which  it  bears  in  the  capitalization  of  these 
corporations  apparently  grows  larger  as  time  passes  and  shrewder 
methods  of  business  gain  ground.  In  the  field  of  the  "industrials" 
proper,  debenture  credit  has  not  until  lately  been  employed  with 
full  effect.  It  seems  to  be  from  the  corporation  finance  of  American 
railway  companies  that  business  men  have  learned  the  full  use  of  an 
exhaustive  debenture  credit  as  an  expedient  for  expanding  business 
capital.  It  is  not  an  expedient  newly  discovered,  but  its  free  use, 
even  in  railway  finance,  is  relatively  late.  Wherever  it  prevails  in 
an  unmitigated  form,  as  with  some  railway  companies,  and  latterly 
in  many  other  industrial  enterprises,  it  throws  the  capitalization  of 
the  business  concerns  affected  by  it  into  a  peculiar,  characteristically 
modem,  position  in  relation  to  credit.  When  carried  out  thoroughly 
it  places  virtually  the  entire  capital,  comprising  the  whole  of  the 
material  equipment,  on  a  credit  basis.  Stock  being  issued  by  the 
use  of  such  funds  as  will  pay  for  printing  the  instruments,  a  road 
will  be  built  or  an  industrial  plant  established  by  the  use  of  funds 
drawn  from  the  sale  of  bonds;  preferred  stock  or  similar  debentures 
will  then  be  issued,  commonly  of  various  denominations,  to  the  full 
amount  that  the  property  will  bear,  and  not  infrequently  somewhat 
in  excess  of  what  the  property  will  bear.     When  the  latter  case 

*  Reprinted  by  permission  of  B.  W.  Huebsch. 

69 


*70       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

occurs,  the  market  quotations  of  the  securities  will,  of  course, 
roughly  adjust  the  current  effective  capitalization  to  the  run  of  the 
facts,  whatever  the  nominal  capitalization  may  be.  The  common 
stock  in  such  a  case  represents  "good  will,"  and  in  the  later  devel- 
opment it  usually  represents  nothing  but  "good  will."  The  ma- 
terial equipment  is  covered  by  credit  instruments — debentures.  Not 
infrequently  the  debentures  cover  appreciably  more  than  the  value 
of  the  material  equipment,  together  with  such  property  as  useful 
patent  rights  or  trade  secrets;  in  such  a  case,  the  good  will  is  also, 
to  some  extent,  covered  by  debentures,  and  so  serves  as  virtual  col- 
lateral for  a  credit  extension  which  is  incorporated  in  the  business 
capital  of  the  company.  In  the  ideal  case,  where  a  corporation  is 
financed  with  due  perspicacity,  there  will  be  but  an  inappreciable 
proportion  of  the  market  value  of  the  company's  good-will  left  un- 
covered by  debentures.  In  the  case  of  a  railway  company,  for  in- 
stance, no  more  should  be  left  uncovered  by  debentures  than  the 
value  of  the  "franchise,"  and  probably  in  most  cases  not  that  much 
actually  is  uncovered. 

Whether  capitalized  good-will  (including  "franchise"  if  neces- 
sary) is  to  be  rated  as  a  credit  extension  is  a  nice  question  that  can 
apparently  be  decided  only  on  a  legal  technicality.  In  any  case  so 
much  seems  clear — that  good-will  is  the  nucleus  of  capitalization  in 
modern  corporation  finance.  In  a  well  financed,  flourishing  corpora- 
tion, good-will,  indeed,  constitutes  the  total  remaining  assets  after 
liabilities  have  been  met,  but  the  total  remaining  assets  may  not 
nearly  equal  the  total  market  value  of  the  company's  good-will ;  that 
is  to  say,  the  material  equipment  (plant,  etc.)  of  a  shrewdly  man- 
aged concern  is  hypothecated  at  least  once,  commonly  more  than 
once,  and  its  immaterial  properties  (good-will),  together  with  the 
evidences  of  its  indebtedness,  may  also  to  some  extent  be  drawn 
into  the  hypothecation.* 

*  The  question  of  "stock-watering,"  "overcapitalization,"  and  the  like  is 
scarcely  pertinent  in  the  case  of  a  large  industrial  corporation  financed  as 
the  modern  situation  demands.  Under  modern  circumstances  the  com- 
mon stock  can  scarcely  fail  to  be  all  "water,"  unless  in  a  small  concern 
or  under  incompetent  management.  Nothing  but  "water" — under  the 
name  of  good-will — belongs  in  the  common  stock;  whereas  the  preferred 
stock,  which  represents  material  equipment,  is  a  debenture.  "Overcapital- 
ization," on  the  other  hand,  if  it  means  anything  under  modern  business 
conditions,  must  mean  overcapitalization  as  compared  with  earning- 
capacity,  for  there  is  nothing  else  pertinent  to  compare  it  with ;  and 
earning-capacity  fluctuates,  while  the  basis  (interest  rates)  on  which 
the  earning-capacity  is  to  be  capitalized  also  fluctuates  independently.  In 
efi^ect,  the  adjustment  of  capitalization  to  earning-capacity  is  taken  care 
of  by  the  market  quotations  of  stock  and  other  securities ;  and  no  other 
method  of  adjustment  is  of  any  avail,  because  capitalization  is  a  question 


THE  PRICE  SYSTEM  71 


W,  C.  Mitchell:  Business  Cycles^  (pp.  32-34;  589-91; 

599) 

The  large  corporation,  dominant  in  the  business  of  to-day,  is 
owned  by  a  miscellaneous  and  shifting  body  of  stockholders.  The 
funds  required  for^fixed  investment  are  usually  provided  in  some 
measure  by  these  owners,  but  in  larger  part  by  bondholders,  who 
may  or  may  not  own  shares  as  well  as  bonds.  The  chief  pecuniary 
risks  are  borne  by  the  shareholders,  but  ordinarily  under  provisions 
which  limit  their  liability  to  the  sums  which  they  have  put  into 
their  shares.  The  work  of  management  is  largely  dissociated  from 
owmership  and  risk.  The  stockholders  delegate  the  supervision  of 
the  corporation's  affairs  to  a  committee— the  directors — and  the 
directors  turn  over  the  task  of  administration  to  a  set  of  general 
officers.  The  latter  are  commonly  paid  fixed  salaries,  though  they 
may  receive  in  addition  a  percentage  of  the  profits,  or  hold  stock 
in  their  own  right. 

In  such  an  organization  it  is  difficult  to  find  any  one  who  cor- 
responds closely  to  the  capitalist-employer.  Certainly  the  typical 
stockholder,  who  takes  no  part  in  managing  the  corporation  beyond 
sending  in  his  proxies  to  be  voted  at  the  annual  meeting,  does  not 
fill  the  bill.  Neither  does  the  typical  director,  who  confines  such 
attention  as  he  may  give  to  the  corporation's  affairs  to  passing  on 
questions  of  general  policy,  selecting  officers,  criticising  or  approving 
their  reports,  and  the  like.  Finally,  the  general  officers,  dependent 
on  the  directors,  remunerated  largely  if  not  wholly  by  salaries,  and 
practising  among  themselves  an  elaborate  division  of  labor,  have 
no  such  discretion  and  carry  no  such  risk  as  the  capitalist-employer. 
The  latter,  in  fine,  has  been  replaced  by  a  "management,"  which 
includes  several  active  directors  ^nd  high  officials,  and  often  certain 
financial  advisers,  legal  counsel,  -and  large   stockholders  who   are 

of  value,  and  market  quotations  are  the  last  resort  in  questions  of  value. 
The  value  of  any  stock  listed  on  the  exchange,  or  otherwise  subject  to 
purchase  and  sale,  fluctuates  from  time  to  time ;  which  comes  to  the  same 
thing  as  saying  that  the  effectual  capitaHzation  of  the  concern,  repre- 
sented by  the  securities  quoted,  fluctuates  from  time  to  time.  It  fluctu- 
ates more  or  less,  sometimes  very  slowly,  but  always  at  least  so  much 
as  to  compensate  the  long-period  fluctuations  of  discount  rates  in  tlie 
money  market  which  means  that  the  purchase  price  of  a  given  frac- 
tional interest  in  the  corporation  as  a  going  concern  fluctuates  so  as  to 
equate  it  with  the  capitaHzed  value  of  its  putative  earning  capacity,  com- 
puted at  current  rates  of  discount  and  allowing  for  risks. 
*  Reprinted  by  permission  of  California  University  Press. 


72        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

neither  directors  nor  officials.  It  is  this  group  which  decides  what 
shall  be  done  with  the  corporation's  property. 

In  other  cases,  however,  a  single  enterprise  dominates  the  cor- 
poration, and  wields  full  authority.  The  stockholders  elect  his  can- 
didates to  office,  the  directors  defer  to  his  judgment,  the  officials  act 
as  his  agents.  His  position  may  be  firmly  entrenched  by  outright 
ownership  of  a  majority  of  the  voting  shares,  or  may  rest  upon 
personal  influence  over  the  owners  of  voting  shares  sufficient  to 
carry  elections.  In  these  "one-man"  corporations  the  theoretical 
division  of  authority  and  function  becomes  a  legal  fiction.  Prac- 
tically, the  dominating  head  of  affairs,  who  may  not  be  an  officer  or 
even  a  director,  corresponds  to  the  old  capitalist-employer,  except 
for  the  fact  that  he  furnishes  a  far  smaller  proportion  of  the  capital, 
carries  a  far  smaller  proportion  of  the  pecuniary  risk,  and  performs 
a  far  smaller  proportion  of  the  detailed  labor  of  superintendence. 
These  limitations  do  not  restrict,  but  on  the  contrary  enhance  his 
power,  because  they  mean  that  the  individual  who  "owns  the  con- 
trol," or  dominates  those  who  own  it,  can  determine  the  use  of  a 
mass  of  property  and  labor  vastly  greater  than  his  own  means 
would  permit. 

Thus,  while  the  corporate  form  of  organization  has  made  a 
theoretical  division  of  the  leadership  of  business  enterprises  among 
several  parties  at  interest,  it  has  also  made  possible  in  practice  a 
centralization  of  power.  The  great  captains  of  finance  and  industry 
wield  an  authority  swollen  by  the  capital  which  their  prestige 
attracts  from  thousands  of  investors,  and  often  augmented  still 
further  by  working  alliances  among  themselves.  Among  the  enter- 
prisers of  the  whole  country,  this  small  coterie  exercises  an  influence 
out  of  proportion  not  only  to  their  numbers  but  also  to  their  wealth. 
The  men  at  the  head  of  smaller  enterprises,  while  legally  free  to  do 
as  they  will  with  their  own,  find  their  field  of  initiative  limited  by 
the  operations  of  these  magnates. 

Nevertheless,  within  the  past  century,  we  have  made  incontest- 
able progress  toward  mastery  over  the  processes  of  the  money 
economy.  The  Tulip  Mania  in  Holland,  the  South  Sea  Scheme  in 
England,  and  the  Mississippi  Bubble  in  France  have  no  worthy 
rivals  in  recent  decades.  Even  the  speculative  excitement  which 
preceded  the  crisis  of  1873  in  the  German  states  and  in  America  has 
scarcely  been  equaled  since  1890.  By  a  combination  of  various 
agencies  such  as  public  regulation  of  the  prospectuses  of  new 
companies,  legislation  supported  by  efficient  administration  against 
fraudulent  promotion,  more  rigid  requirements  on  the  part  of  stock 
exchanges  regarding  the  securities  admitted  to  official  lists,  more 
efficient  agencies  for  giving  investors  information,  and  more  con- 


THE  PRICE  SYSTEM  73 

servative  policy  on  the  part  of  banks  toward  speculative  loans,  we 
have  learned  to  avoid  certain  of  the  rashest  errors  committed  by- 
earlier  generations.  Again,  from  hard  experience,  European  banks 
at  least  have  learned  methods  of  controlling  a  crisis  and  preventing 
it  from  degenerating  into  a  panic.  The  "integration  of  industry" 
has  also  done  something,  though  less  than  is  often  claimed,  toward 
steadying  the  course  of  business  both  by  concentrating  power  in 
the  hands  of  experienced  officials,  and  by  moderating  the  extreme 
fluctuations  of  prices 

The  advantage  enjoyed  by  this  small  group  of  major  financiers 
is  not  limited  to  superior  opportunities  for  foreseeing  approaching 
changes.  In  a  measure  they  can  control  the  events  they  forecast. 
This  ability  arises  chiefly  from  the  increasing  centralization  of 
power  to  grant  or  withhold  credits.  On  the  one  hand,  the  rise  of 
the  great  corporation  has  made  the  business  enterprises  of  strategic 
importance  dependent  upon  the  metropolitan  markets  for  loans  and 
securities,  rather  than  upon  local  banks  and  investors.  On  the 
other  hand,  the  great  banks,  insurance  companies,  and  investment 
houses  which  dominate  the  financial  markets  of  New  York,  London, 
Paris,  and  Berlin  have  developed  intimate  relations  with  each  other, 
and  can  be  controlled  by  a  few  small  coteries  of  financiers.  To 
these  men  is  therefore  given  a  large  measure  over  the  granting  of 
bank  loans,  the  floating  of  new  securities,  and  the  prices  of  out- 
standing stocks  and  bonds.  This  power  they  can  use,  if  they  choose, 
to  increase  the  stresses  which  prosperity  breeds.  If  they  lock  up 
large  sums  of  money,  for  example,  they  reduce  the  reserves  of  banks 
and  precipitate  the  downward  revision  of  credits  with  which  a  crisis 
begins.  If  they  block  corporations  from  raising  loans  needed  to 
meet  maturing  obligations,  they  force  the  appointment  of  receivers, 
beat  down  the  price  of  stocks,  and  create  a  sentiment  of  distrust 
which  produces  further  consequences  of  its  own. 

What  little  is  known  of  the  "inside  workings  of  high  finance"  in- 
dicates that  this  power  has  not  yet  been  exercised  with  the  ruthless 
efficiency  of  which  it  is  susceptible.  Doubtless  many  great  business 
men  would  recoil  from  the  idea  of  deliberately  aggravating  a  crisis 
for  their  own  gain.  Moreover,  the  financiers  who  have  most  power 
over  credit  are  often  heavily  interested  in  industrial  enterprises,  and 
fear  to  lose  dividends  in  the  period  of  depression  which  would 
follow  a  crisis.  A  third  deterrent  is  the  obsession  of  the  dollar  as 
a  stable  measure  of  value.  So  accustomed  do  business  men  become 
to  treating  the  dollar  as  constant  and  imputing  all  changes  in 
prices  to  fluctuations  in  the  value  of  the  goods  quoted,  that  they  do 
not  readily  grasp  the  money  profit  to  be  made  out  of  changes  in 
the  general  level  of  prices.    Finally,  even  in  the  highest  circles  of 


74       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

finance,  centralization  of  power  has  not  yet  gone  far  enough  to 
guarantee  unanimity  of  action. 

Among  these  deterrents  from  the  effort  to  aggravate  the  fluctua- 
tions of  business  conditions,  two  at  least  seem  to  be  losing  their 
force.  The  increasing  mobility  of  investments  is  making  it  easier  for 
financiers  to  extricate  their  funds  from  industrial  entanglements  and 
put  them  into  such  form  that  a  period  of  depression  can  bring 
no  serious  loss.  And  the  continual  fluctuations  in  the  price  level 
are  ever  demonstrating  that  dollars  are  shifting  units,  out  of  whose 
fluctuations  profits  may  be  made.  It  is  therefore  quite  possible 
that  financiers  may  exploit  their  opportunities  for  aggravating  crises 
with  greater  energy  in  the  immediate  future  than  they  have  done  in 
the   recent  past 

Brief  as  it  is,  this  statement  of  how  business  cycles  react 
upon  social  well-being  suffices  to  suggest  the  double  personality 
acquired  by  citizens  of  the  money  economy.  Money  making  for  the 
individual,  business  prosperity  for  the  nation,  are  artificial  ends  of 
endeavor  imposed  by  pecuniary  institutions.  Beneath  one  lies  the 
individual's  impulsive  activities — his  maze  of  instinctive  reactions 
partially  systematized  into  conscious  wants,  definite  knowledge,  and 
purposeful  efforts.  Beneath  the  other  lie  the  vague  and  conflicting 
ideals  of  social  welfare  which  members  of  each  generation  re-fashion 
after  their  own  images.  In  this  dim  inner  world  He  the  ultimate 
motives  and  meanings  of  action,  and  from  it  emerge  the  wavering 
standards  by  which  men  judge  what  is  for  them  worth  while. 

The  money  economy  has  not  supplanted,  but  it  has  harnessed 
these  forces.  Upon  human  activity  and  human  ideals  it  has  stamped 
its  own  pattern.  How  it  has  facilitated  the  division  of  labor,  how  it 
has  given  a  pecuniary  twist  to  the  desire  for  distinction,  how  it 
has  shifted  the  basis  of  political  power  and  given  rise  to  new  social 
classes — these  results  of  the  money  economy  are  widely  recognized. 
How  it  has  taught  men  to  think  in  terms  of  its  own  formal  logic, 
efficient  within  certain  limits  but  arid  when  pushed  to  extremes,  has 
been  partially  worked  out  by  writers  like  Simmel,  Sombart  and 
Veblen.  How  its  technical  exigencies  subject  economic  activity 
to  continual  alterations  of  expansion  and  contraction  this  book 
has  aimed  to  show  in  detail. 

Subject  as  men  are  to  the  sway  of  pecuniary  concepts  and  ideals 
they  can  still  judge  the  workings  of  the  money  economy  by  more 
intimate  and  more  vital  standards.  To  make  these  latter  standards 
clear,  to  show  in  what  definite  ways  the  quest  of  profits  transgresses 
them,  and  to  devise  feasible  methods  of  remedying  these  ill  results, 
is  a  large  part  of  the  task  of  social  reform.  Economic  theory  will 
not  prove  of  much  use  in  this  work  unless  it  grasps  the  relations 


THE  PRICE  SYSTEM  75 

between  the  pecuniary  institutions  which  civilized  man  is  perfecting, 
the  human  nature  which  he  inherits  from  savage  ancestors,  and  the 
new  forces  which  science  lends  him.  To  treat  money  as  an  empty 
symbol  which  "makes  no  difference  save  one  of  convenience"  is  a 
habit  exceeded  in  artificiality  only  by  the  habit  against  which  it  pro- 
tests— that  of  treating  money-making  as  the  ultimate  goal  of  effort. 

From  ^'Report  of  the  Commissioner  of  Corporations  on 

the  Tobacco  Industry''  Part  II,  Capitalization, 

Investment  and  Earnings,  Sept.  25,  1911 

The  very  high  rates  of  profit  obtained  by  the  Combination  as  a 
result  of  its  monopolistic  position  have  enabled  it  to  pay  dividends 
on  a  very  excessive  capitalization. 

Repeated  inflations  of  the  securities  of  the  Combination,  more- 
over, have  been  extremely  profitable  to  the  stockholders  and  have 
resulted  in  the  accumulation  of  enormous  private  fortunes.  As  shown 
in  the  body  of  the  report,  an  investment  in  the  common  stock  of  the 
American  Tobacco  Company  made  at  its  organization  in  1890  and 
held  intact  to  the  end  of  1908  would  have  received  in  dividends 
(excluding  the  100  per  cent  of  stock  at  par  in  1899)  more  than  400 
per  cent  on  the  original  amount.  And  in  addition  to  this,  the  market 
value  of  the  securities  as  they  then  stood  (end  of  1908),  would  have 
been  580  per  cent  in  excess  of  the  par  value  of  the  original  securities. 
The  dividends  received  in  this  period,  the  inflation  of  the  securities, 
and  the  appreciation  of  their  value  in  the  market  would,  therefore, 
amount  to  nearly  1,000  per  cent  on  the  original  investment.  Even 
if  the  stock  held  had  been  exchanged  for  bonds  of  the  Consolidated 
Tobacco  Company  in  1901,  the  dividends,  interest,  and  excess  of  the 
market  value  of  the  securities  would  have  amounted  to  521.5  per 
cent  of  the  original  par  value  of  the  investment. 

The  results  of  the  enormous  inflation  and  appreciation  in  value  of 
the  securities  and  of  the  dividends  paid  are  seen  in  a  more  striking 
way  when  the  growth  in  the  investment  of  one  of  the  original  con- 
cerns that  entered  the  American  Tobacco  Company  is  considered. 
The  W.  Duke  Sons  &  Co.  business  in  1885  was  valued  at  $250,000 
and  in  that  year  capitalized  at  this  figure  (in  1878  at  $70,000). 
Without  other  additions  than  surplus  earnings  this  business  formed 
the  basis,  five  years  later,  for  the  issue  of  $7,500,000  of  stock  of  the 
American  Tobacco  Company,  $3,000,000  preferred  and  $4,500,000 
common  stock.  This  stock,  partly  as  the  result  of  the  100  per  cent 
dividend  on  the  common  in  1899,  partly  on  account  of  the  issue  of 
$200  of  bonds  for  each  $100  of  common  stock  in  1901,  and  partly  on 


76        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

account  of  the  readjustment  of  the  securities  in  1904,  had  increased 
in  1908  to  securities  of  a  par  value  of  $22,000,000.  From  1890  to 
1908,  moreover,  cash  dividends  and  interest  paid  on  the  stock  and 
bonds  based  on  the  Duke  business  amounted  to  $16,732,500.  The 
par  value  of  the  securities  and  the  cash  dividends  to  the  end  of  1908, 
therefore,  amounted  to  nearly  $39,000,000,  or  156  times  the  capital- 
ized value  of  the  Duke  business  in  1885.  By  taking  the  market 
value  of  the  securities,  the  results  would  be  practically  the  same. 

This  remarkable  appreciation  takes  into  consideration  only  the 
readjustments  of  the  stock  of  the  American  Tobacco  Company  and 
the  dividends  paid  thereon.  The  profits  derived  from  the  additional 
investment  in  the  stock  of  the  Consolidated  in  1901,  such  profits 
going  principally  to  a  few  inside  interests,  make  the  results  still  more 
startling.  The  dividends  on  this  stock  and,  after  the  merger,  on  the 
common  stock  of  the  new  American,  into  which  it  was  converted,  and 
the  appreciation  of  its  value  amounted  in  the  short  period  1 901-1908 
to  360  per  cent  on  the  par  value  of  this  additional  investment. 

These  enormous  profits  resulting  from  the  inflation  of  the  securi- 
ties and  the  dividends  paid  thereon  rest,  in  their  ultimate  analysis, 
upon  the  monopolistic  advantages  obtained  in  this  industry  through 
concentration  of  control. 

Summary  of  the  Report  of  the  Federal  Trade  Commis- 
sion  on  the  Meat  Packing  Industry,  July  3,  1918 

There  is  no  doubt  that  the  packers'  profits,  particularly  since 
the  beginning  of  the  European  war,  have  been  enormous,  both  in 
the  United  States  and  in  foreign  countries.  Measured  by  pre-war 
profits,  the  191 7  profits  (exclusive  of  Armour's  foreign  profits,  in- 
clusive of  only  part  of  Swift's  South  American  profits)  were  350 
per  cent  greater  than  in  the  average  of  the  three  years  before  the 
European  war;  measured  by  the  amount  of  sales,  they  advanced, 
in  191 7,  4.6  cents  on  the  dollar,  which  was  sufficient  to  produce 
for  the  five  companies  a  total  profit  of  $96,182,000;  measured  by  the 
net  worth  of  the  combined  corporations  (capital  stock  plus  surplus), 
they  averaged,  in  1917,  21.6  per  cent;  measured  by  the  capital 
stock  outstanding,  as  an  indication  of  the  dividend  possibilities,  they 
averaged  in  1917,  39.5  per  cent;  and  measured  by  the  packers' 
actual  investment  of  new  capital,  they  amount  to  several  times  even 
this  last  figure. 

All  these  are  minimum  figures  for  the  reason  that  the  packers' 
accounts  are  so  constructed  that  they  conceal  profits  rather  than 
reveal  them. 


3.     PROFITS 

65t7i  Congress  2d  Session^  Senate  Document  No.  259 

Letter  from  the  Secretary  of  the  Treasury,  William  G.  McAdoo, 
transmitting  in  response  to  a  Senate  Resolution  of  June  6,  iQi8, 
certain  facts,  figures,  data,  and  information  taken  from  igi6 
and  1917  income  and  excess  profits  tax  returns  of  corporations 
to  the  Treasury  Department,  dated  July  5,  igi8 — Extract: 

The  information  submitted  herewith  in  response  to  the  first  para- 
graph of  the  resolution  was  obtained  from  the  income  and  excess 
profits  returns  of  31,500  of  a  total  of  approximately  55,000  cor- 
porations in  the  United  States  which,  in  the  calendar  year  191 7, 
earned  1 5  per  cent  or  more  on  their  capital  stock.  The  corpora- 
tions included  in  this  list  are  believed  to  be  representative,  as  some 
are  included  from  each  of  the  major  groups  and  most  of  the  minor 
groups  representing  the  various  recognized  industries,  trades  and 
occupations  comprising  the  business  activities  of  the  country. 

Report  of  Federal  Trade  Commission  Regarding 
Profiteering,  June  29,  1918 

To  the  President  of  the  United  States  Senate. 

Sir:  The  Federal  Trade  Commission  submits  the  following  re- 
port in  response  to  the  direction  under  Senate  resolution  255  that  it 
furnish  the  Senate  with  any  and  all  facts,  figures,  data,  or  informa- 
tion now  in  possession  of  the  Federal  Trade  Commission  relative  to 
profiteering  which  would  in  any  way  enable  Congress  to  deal  with 
the  matter  either  through  the  present  proposed  resolution  or  through 
enactment  of  more  effective  criminal  statutes 

STEEL 

In  191 7,  the  steel  companies  made  abnormal  profits  in  the  period 
prior  to  the  Government  price-fixing  policy,  and  a  number  have  con- 
tinued to  make  unusually  heavy  profits  since  that  policy  was  inaugu- 

77 


78        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

rated.  In  finding  cost  in  this  industry  for  the  War  Industries  Board^ 
the  commission  divided  the  steel  makers  into  four  groups:  (i)  The 
fully  integrated  mills,  (2)  the  mills  which  start  Avith  the  manufacture 
of  pig  iron,  (3)  the  mills  that  start  with  steel  furnaces,  and  (4)  the 
mills  that  make  rolled  products  from  purchased  semifinished  steel. 
The  United  States  Steel  Corporation  is  included  in  class  one.  Its 
profits  expressed  in  terms  of  the  total  amount  invested  in  the  business 
show  net  earnings  as  follows: 

Per  cent.  Per  cent. 

1912 4-7      1915 5-2 

1913 57      1916 15.6 

1914 2.8      1917 24.9 

The  figures,  as  to  the  net  income  of  the  Steel  Corporation,  as 
shown  by  the  company  for  the  years  of  1912,  1913,  1914,  1915, 
1916,  and  191 7,  before  deducting  Federal  income  and  excess-profit 
tax  in  191 7,  follow: 

1912 $77,075,217     1915 $97,967,962 

1913 105,320,691      1916 29!,0-6,564 

1914 46,520,407      1917 478,204,343 

The  Federal  income  and  excess-profit  taxes  of  the  Steel  Corpora- 
tion for  191 7  were  $233,465,435,  which  leaves  from  net  income 
$244,738,908,  of  which  about  one-tenth  was  applicable  to  interest 
on  bonds  of  the  corporation  and  the  rest  available  for  dividends  and 
surplus. 

From  information  in  possession  of  the  commission  mills  in  class 
2  appear  to  have  made  heavy  profits  in  191 7.  Recently,  mills  in 
class  3  made  objection  that  the  Government  prices  were  too  low  for 
them.  A  special  examination  of  their  profits  by  the  Federal  Trade 
Commission  showed  that  in  almost  every  case  these  objecting  mills 
were  enjoying  unusual  returns.  The  following  table  of  percentage 
of  return  on  investment  in  10  mills  in  class  3. will  show  the  profits 
in  1917: 

Alan  Wood,  Iron  &  Steel  Co 52.63 

Allegheny    Steel    Co 78.92 

American  Tube  &  Stamping  Co 40.03 

Central   Iron  &    Steel   Co 71-35 

Eastern    Steel    Co 30.24 

Forged  Steel  Wheel  Co 105.40 

Follansbee    Bros.    Co 112.48 

Nagle  Steel   Co 319-67 

West  Penn  Steel  Co I59-OI 

[West  Leechburg  Steel  Co 109.0S 


THE  PRICE  SYSTEM  79 

Mills  in  class  4,  which  buy  the  semi-finished  steel  and  convert  it 
into  the  more  highly  developed  steel  products,  have  enjoyed  sub- 
stantial profits, 

COPPER 

Very  large  earnings  have  been  made  in  the  copper  industry  on 
the  whole,  although  it  should  be  noted  that  they  have  been  due  in 
part  to  an  unusually  heavy  demand  for  this  metal,  which  is  used 
almost  exclusively  for  war  purposes,  directly  and  indirectly.  The 
commission's  figures  show  that  21  companies,  including  a  large  pro- 
portion of  high-cost  companies,  made  profits  in  191 7  which  ranged 
from  I  per  cent  to  107  per  cent  on  their  investments.  The  average 
profit  was  24.4  per  cent.  Probably  over  70  per  cent  of  the  produc- 
tion is  marketed  at  profits  over  20  per  cent  on  investment.  These 
same  companies  show  an  average  profit  of  only  11.7  per  cent  in  19 13, 
which  may  be  considered  to  be  a  normal  year.  Thus,  the  average 
profit  in  the  industry  has  more  than  doubled.  The  range  of  profits 
in  1913  was  from  i  to  56  per  cent. 

The  profits  used  in  these  computations  do  not  include  Federal  in- 
come or  excess-profits  taxes,  and  therefore  represent  sums  actually 
retained  by  the  companies  for  addition  to  surplus  or  dividends. 

There  does  not  appear  on  the  whole  to  have  been  any  concerted 
action  in  this  industry  in  putting  prices  up  in  the  first  instance.  The 
war  scramble  among  the  Allies  shot  the  prices  of  copper  and  other 
metals  to  almost  unheard-of  levels.  But  there  are  certain  strong  in- 
terests among  the  producers  and  marketers  which  predominate  in 
certain  stages  of  production,  and  these  appear  to  have  taken  steps  to 
maintain  prices  at  unnecessarily  high  levels.  In  the  first  place,  the 
smelters,  and  notably  the  American  Smelting  &  Refining  Co.,  have 
continued  to  hold  in  force  certain  deductions  for  risk  of  carrying 
copper  bought  from  mines,  which  risks  have  ceased  to  exist.  These 
deductions  were  put  in  force  during  the  early  period  of  the  war  be- 
fore price  was  fixed  by  agreement  with  the  War  Industries  Board. 
Their  present  maintenance  amounts  to  profiteering  at  the  expense  of 
the  miners,  especially  the  small  producers.  On  the  other  hand,  some 
of  the  larger  and  richer  mines  have  contracts,  entered  into  before  the 
war,  running  for  periods  as  long  as  20  years,  which  are  extremely 
advantageous  to  them  and  which  are  now  causing  some  refineries  to 
operate  at  a  loss. 

LUMBER 

Information  in  the  commission's  possession  does  not  indicate  any 
excessive  profits  in  the  lumber  industry  on  the  west  coast,  although 


8o        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

it  is  understood  that  producers  of  aeroplane  spruce  in  that  region 
have  in  the  past  taken  advantage  of  Allied  governments.  Informa- 
tion in  the  commission's  possession  does  indicate  unusually  and  un- 
necessarily large  profits  on  the  part  of  the  southern  pine  producers. 
Forty-eight  southern  pine  companies,  producing  2,615,000,000  feet 
of  lumber  in  191 7,  made  an  average  profit  on  the  net  investment  of 
1 7  per  cent.  This  is  unusually  large  for  the  industry,  as  is  indicated 
by  the  fact  that  the  average  profit  in  1916  was  only  5.2  per  cent.  In 
19 1 7,  47  per  cent  of  the  footage  of  the  companies  covered  was  pro- 
duced at  a  profit  of  over  20  per  cent.  The  range  of  profits  was  from 
a  small  loss  to  over  121  per  cent  on  the  net  investment. 

The  margin  of  profit  per  thousand  board  feet  in  191 7  was  nearly 
double  that  in  previous  years,  the  figure  being  $4.83,  as  compared 
with  $2.11  in  191 6.  A  fair  margin  per  thousand  feet  in  the  past 
has  been  recognized  as  being  $3. 

These  figures  for  191 7  are  the  more  notable  for  the  reason  that 
the  profits  shown  do  not  include  any  payments  of  Federal  income 
and  excess-profits  taxes,  but  are  the  sums  actually  available  for  ad- 
ditions to  surplus  or  dividends.  Information  secured  from  the  com- 
panies concerning  their  dividends  and  income  taxes  supports  the 
preceding  statements. 

COAL 

Generally  speaking,  the  bituminous  coal  operators  in  19 17  had 
very  much  larger  margins  than  in  previous  years.  While  in  19 16 
the  margins  (what  operators  actually  received  for  coal  sold  over 
•f.  o.  b.  mine  cost)  may  be  regarded  in  some  cases  as  lower  than 
normal,  yet  the  margins  of  191 7  were  often  two  or  three  times 
the  normal  return.  In  the  figures  for  19 16  and  191 7  mentioned 
below  return  on  investment  must  be  covered  in  margins  shown.  The 
increase  of  margins  is  illustrated  by  an  examination  of  the  returns 
for  191 6  and  191 7  of  23  typical  bituminous  coal  companies  in  the 
central  Pennsylvania  field.  The  average  margin  of  these  companies 
in  191 6  was  20  cents  per  ton,  and  in  191 7  was  90  cents.  The  high- 
est margin  for  any  company  of  the  23  in  191 7  was  $1.85.  The 
corresponding  margin  for  this  company  in  19 16  was  41  cents.  Sim- 
ilarly the  lowest  margin  for  any  of  these  companies  in  19 17  was  27 
cents,  the  corresponding  margin  for  the  same  company  in  1916 
being  13  cents. 

Maximum  coal  prices  f.  0.  b.  mines  were  authoritatively  fixed 
August  21  to  23,  1917,  by  Executive  order,  and  subsequently  modi- 
fied by  the  Fuel  Administration.  Contracts  made  before  that  time 
were  not  invalidated.  In  some  fields  as  high  as  90  per  cent  of 
possible  production  was  sold  under  contract  prices.     While  some 


THE  PRICE  SYSTEM  8i 

contracts  were  below  legal  maximum  price,  probably  much  the 
greater  part  of  the  coal  sold  under  contract  went  at  prices  sub- 
stantially in  excess  of  legal  maximum  prices  fixed  for  current 
sales. 

April  realizations  contain  relatively  little  coal  sold  on  contracts 
made  prior  to  August  21,  since  most  such  contracts  expired  April  i, 
1918.  Sample  reports  for  April  operations,  covering  12,619,274  tons 
actually  mined  in  West  Virginia,  Pennsylvania,  Ohio,  Indiana, 
Illinois,  and  Kentucky  show  an  average  margin  between  claimed 
f.  o.  b.  mine  cost  and  actual  realization  from  sales  of  about  54  cents, 
as  against  a  pre-war  margin  of  an  average  of  10  to  15  cents. 

In  anthracite  the  average  receipts  per  ton,  including  all  sizes, 
during  the  year  1914  (13  companies,  producing  79  per  cent  of  the 
total  tonnage  in  1916),  were  $2.86  per  ton.  The  average  receipts  per 
ton  of  anthracite,  including  all  sizes,  allowing  for  later  obligatory 
summer  discounts  on  prepared  sizes,  during  the  period  January- 
March,  19 1 8  (6  companies,  producing  50  per  cent  of  the  tonnage  in 
19 1 6),  were  $4.26  per  ton.  The  average  labor  cost  increase  per  ton 
since  1914  was  $0.76,  and  if  this  is  deducted  from  the  1918  average 
receipts  per  ton  an  increase  of  $0.64  per  ton  (or  22  per  cent)  in 
average  receipts  is  indicated,  without  allowance  for  increased  cost  of 
supplies  and  general  expense. 

In  connection  with  the  distribution  of  coal  it  may  be  pointed 
out  that  prior  to  the  official  regulation  of  jobbers'  and  of  retailers' 
m^argins  in  August,  191 7,  there  was  evidence  that  many  of  the 
margins  were  unduly  high  when  compared  to  the  pre-war  margins. 
Details  can  be  found  in  the  Report  of  the  Federal  Trade  Commission 
on  Anthracite  and  Bituminous  Coal,  June  20,  1917.  Since  the  regu- 
lation was  established  most  of  the  jobbers'  transactions  have  been 
carried  on  within  the  fixed  margin,  and  whenever  violations  have 
been  detected  the  jobbers  have  been  forced  to  refund  the  overcharges. 
It  should  be  understood  that  jobbers'  and  retailers'  margins  do  not 
represent  net  profits  alone,  but  also  include  all  expenses  incurred 
by  them  from  the  time  coal  is  purchased  until  it  is  sold. 

PETROLEUM   AND   ITS   PRODUCTS 

The  data  secured  by  the  Federal  Trade  Commission  for  106  re- 
fining companies  for  the  first  quarter  of  19 18,  supplemented  in  cer- 
tain cases  by  returns  for  the  second  six  months  of  191 7,  indicate  that 
the  average  profit  in  the  oil  industry  is  about  21  per  cent  on  the 
investment.  This  is  a  considerable  increase  over  the  rate  of  profits 
indicated  for  pre-war  years,  as  the  commission's  gasoline  report  in- 
dicates an  average  profit  for  the  years  1913,  191 4,  and  19 15  of  15 


82        CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

per  cent  on  the  investment.  In  1917  over  50  per  cent  of  the  es- 
timated production  was  produced  by  companies  having  a  profit  of 
over  20  per  cent  on  the  investment.  Rates  of  profit  ranged  from 
losses  up  to  122  per  cent. 

The  profits  of  the  eastern  refiners  have  been  relatively  larger 
than  those  on  the  Pacific  coast.  The  situation  in  the  East  is  due 
to  the  fact  that  while  gasoline  prices  have  been  but  slightly  ad- 
vanced, the  prices  of  other  products  have  been  increased  greatly, 
especially  the  price  of  fuel  oil.  The  public  knows  little  about  prices 
except  the  price  of  gasoline  and  to  a  less  extent  kerosene.  Formerly 
refineries  operated  for  the  sake  of  the  gasoline  almost  exclusively, 
and  fuel  oil  was  commonly  sold  at  a  loss,  but  now  fuel  oil  is  a  very 
profitable  product. 

The  following  table  will  show  the  per  cent  of  net  earnings  on 
investment  for  a  series  of  years.  The  earnings  for  19 18  are  esti- 
mated on  the  basis  of  the  second  six  months  of  191 7  or  the  first 
quarter  of  191 8. 


I9i8« 

(esti- 
mated) 


Atlantic  Refining  Co 

Standard  of  Indiana 

Standard  of  New  Jersey 

Standard  of  New  York 

Standard  of  Ohio 

Standard  of  Kansas 

Magnolia  Petroleum  Co . . .  . 

Standard  of  California 

Continental  Refining  Co.. .. 

Empire  Oil  Works 

Penn  American  Refining  Co 

Cosden  &  Co 

Muskogee  Refining  Co 

National  Refining  Co 

The  Texas  Co 


First 

I9I3' 

1914' 

I9IS> 

quarter, 
1918 

16.4 

-  3.7 

21.7 

'IS-O 

36. s 

14-5 

36.0 

821.7 

9-7 

7.8 

20.6 

'9.1 

21.2 

8.1 

16.0 

36.6 

23.4 

13.8 

23 -9 

'14.3 

91.6 

i.o 

17.9 

<25.6 

19.2 

16. 5 

14.2 

4.4 

16.8 

12. S 

10.6 

6.5 

1.6 

-   7.8 

3-3 

1.2 

4-4 

-  31 

5.6 

7-3 

35-3 

13.3 

12.3 

IS. 8 

30.6 

-SO. 7 

59 

8.7 

6.9 

18.8 

6.2 

24.9 

8.0 

20.4 

2.3 

17. 1 

13-3 

12.7 

«I3.3 

+30.0 

+43.3 

+18.2 

13.3 

+28. 6 
+51-3 

17.6 
+25-9 
+  4.7 
+29.2 
+63.1 

23-5 

+24.8 

9.2 

26.7 


'  See  pp.  io8-ro9  of  Report  on  the  Price  of  Gasoline  in  1915. 

*  Estimates  based  on  figures  for  last  six  m.onths  of  1917  or  first  quarter  of  1918. 

'Six  months  period,  Jidy-December,  1917. 

*Last  six  months  of  191 7. 


MEAT  PACKING 

An  exposition  of  the  excess  profits  of  four  of  the  big  meat  packers 
(Armour,  Swift,  Morris,  Cudahy,  omitting  Wilson  as  not  compar- 
able) is  given  in  the  fact  that  their  aggregate  average  pre-war  profit 
(1912,  1913,  and  1914)  was  $19,000,000;  that  in  1915  they  earned 
$17,000,000  excess  profits  over  the  pre-war  period;  in  19 16, 
$36,000,000  more  profit  than  in  the  pre-war  period;  and  in  19 17, 
$68,000,000  more  profit  than  in  the  pre-war  period.  In  the  three 
war  years  from  1915  to  1917  their  total  profits  have  reached  the 


THE  PRICE  SYSTEM 


83 


astounding  figure  of  $140,000,000,  of  which  $121,000,000  represents 
excess  over  their  pre-war  profits. 

These  great  increases  in  profits  are  not  due  solely  to  increased 
volume  of  business.  The  sales  of  these  companies  in  this  period 
increased  150  per  cent,  much  of  this  increase  being  due  to  higher 
prices  rather  than  to  increased  volume  by  weight,  but  the  return  of 
profit  increased  400  per  cent,  or  two  and  one-half  times  as  much  as 
the  sales. 

The  profit  taken  by  Morris  &  Co.  for  the  fiscal  year  ended  No- 
vember I,  191 7,  is  equal  to  a  rate  of  18.6  per  cent  on  the  net 
worth  of  the  company  (capital  and  surplus)  and  263.7  per  cent  on 
the  three  millions  of  capital  stock  outstanding.  In  the  case  of  the 
other  four  companies  the  earned  rate  on  common  capital  stock  is 
much  lower — from  27  per  cent  to  47  per  cent — but  the  reason  for 
this  is  that  these  companies  have  from  time  to  time  declared  stock 
dividends  and  in  other  ways  capitalized  their  growing  surpluses. 
Thus  Armour  in  19 16  raised  its  capital  stock  from  twenty  millions 
to  one  hundred  millions  without  receiving  a  dollar  more  of  cash.  If 
Swift,  Wilson,  Cudahy,  and  Armour  had  followed  the  practice  of 
Morris  in  not  capitalizing  their  surpluses  (accumulated  from  ex- 
cessive profits) ,  they  too  would  now  show  an  enormous  rate  of  profit 
on  their  original  capital. 

Rates  of  profit  earned  by  these  five  companies  in  war  years  com- 
pared with  the  pre-war  average,  based  on  net  worth  (capital  and 
surplus)  and  on  common  stock,  are  as  follows: 


Actual  profit  on  net  worth. 

Armour. 

Swift. 

Morris. 

Wilson. 

Cudahy. 

Pre-war  average,  1912-14 

Per  cent. 

6.2 

14.6 

216.8 

227.1 

Per  cent. 

8.3 

21 .0 

26.7 

47.2 

Per  cent. 
6.8 

13. S 

18.6 
263.7 

Per  cent. 
(') 
(') 
23.8 

42.  S 

Per  cent. 

7-3 

14. 1 

18.7 

Rate  on  common  stock,  1917 

47.0 

1  Figures  not  available. 

*  Foreign  business  not  included  would  undoubtedly  raise  percentages. 

The  independent  packers,  as  measured  by  results  compiled  for  65 
of  the  largest  of  them,  earned  during  191 4,  1915,  and  1916  a  rate  of 
profit  as  high  or  slightly  higher  than  that  earned  by  the  big  packers 
in  those  years.  The  profits  of  these  independent  companies  for 
191 7  are  not  as  yet  available. 

LEATHER   AND   LEATHER   GOODS 

During  the  year  191 7  a  larr'e  proportion  of  the  tanners  in  the 
United  States  made  unusual  profits.    As  the  commission  reported  in 


84       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

January  last,  reports  of  a  number  of  the  larger  companies  show  that 
net  profits  in  191 6  were  in  several  instances  two,  three,  four  or  even 
five  times  as  large  as  in  191 5,  and  the  191 5  net  profits  in  turn  showed 
increases  of  from  30  per  cent  to  more  than  100  per  cent  over  those  of 
1914.  One  striking  instance  is  a  company  whose  net  profits  were 
reported  as  follows: 

1914    $644,390.90 

1915    945.051-37 

1916    3.576,544-27 

The  tanners  took  advantage  of  the  enormous  demand  for  leather 
and  took  very  high  prices.  During  19 17  the  prices  of  hides,  particu- 
larly packer  hides,  were  advanced  very  rapidly,  notwithstanding  that 
during  the  period  of  advance  great  supplies  of  hides  were  withheld 
from  the  public. 

Many  shoe  manufacturers  in  191 7  made  larger  profits  than  usual. 
Wholesale  shoe  dealers  secured  wider  margins  of  profit  in  191 7  than 
they  had  been  accustomed  to  receive.  The  margins  of  retail  shoe 
dealers  widened  greatly  during  191 7,  especially  upon  fancy  shoes. 
This  was  true  to  a  less  extent  on  staple  shoes.  It  appears  that  the 
retailer  has  profited  more  in  proportion  than  the  wholesaler. 

As  an  indication  of  earnings  of  the  big  packers  in  the  selling 
branch  of  their  leather  business  the  following  is  quoted  from  a  letter 
of  January  17,  19 17,  by  the  Eastern  Leather  Co.,  an  Armour  selling 
subsidiary,  to  Mr.  F.  W.  Croll,  of  Armour  &  Co.: 

We  are  inclosing  our  check  on  the  National  City  Bank,  New  York 
City,  payable  to  Mr.  J.  Ogden  Armour,  for  $915,787,  same  being  a 
dividend  of  53  per  cent,  on  the  17,279  shares  of  common  stock  standing 
in  his  name.  In  addition  to  this,  and  in  accordance  with  our  conver- 
sation when  in  Chicago,  we  have  set  aside  as  a  surplus  $250,000,  which 
represents  10  per  cent,  on  the  common  stock. 

We  are  also  inclosing  a  check  on  the  National  City  Bank  for 
$202,145.62  payable  to  Mr.  Armour,  this  being  the  balance  due  on 
6,020  shares  of  common  stock  held  for  employees. 

Here  is  a  memorandum  of  May  15,  191 7,  from  J.  D.  Murphy  to 
Mr.  H.  W.  Boyd,  president  of  the  Armour  Leather  Co.: 

May  15,  1917. 
Mr.  H.  W.  Boyd: 

Herewith  comparative  statement  of  results  in  the  leather  business 
for  the  three  months  ending  April  28,  showing  earnings  of  $1,964,- 
945.18.  This  does  not  include  Woodstock,  as  we  have  not  finished, 


THE  PRICE  SYSTEM  85 

enough  of  our  own  leather  up  there  to  make  a  loss  and  gain  result  of 
any  value  as  indicating  the  possibilities  of  the  plant. 

As  per  Mr.  Armour's  instructions,  given  through  Mr.  Stull,  we  are 
charging  off  in  reduction  of  the  above  the  following  reserves : 

Earnings  as  above $i,964>945-^^ 

Reserve  for  income  tax,  t,  months  ending  Apr. 

29,   1917   $36,915.61 

Reserve    for    estimated    excess-profits    tax,    6 

months  ending  April  28,  1917 423,620.84 

460,536.45 

Net  earnings   $i,504,4o8-73 

J.  D.  Murphy. 

Here  is  another  letter,  in  which  Mr.  H.  W.  Boyd  writes  Mr. 
Armour  comparing  the  results  of  the  Armour  Leather  Co.  with  the 
Central  Leather  Co.'s  statement: 

October  31,  1917. 
Dear  Mr.  Armour: 

In  reference  to  the  Central  Leather  Co.'s  statement,  would  say  that 
it  does  not  compare  favorably  with  ours.  You  will  notice  that  after 
deducting  interest  and  dividends  they  only  have  $40,000  to  add  to  the 
surplus.  We  made  $600,000  and  they  are  doing  four  times  the  amount 
of  business  and  only  made  $1,900,000,  and  as  stated  above,  after  de- 
ducting interest  on  the  bonds  and  paying  dividends  they  only  had 
$40,000  left  to  add  to  their  surplus. 

I  think,  considering  their  lumber  business,  which  is  wonderful  (the 
manager  of  the  Pennsylvania  Lumber  Co.  told  me  that  they  never 
expected  to  realize  the  profits  they  were  making  on  hemlock  lumber, 
and  that  they  were  doing  an  enormous  business),  that  our  statement  is 
a  great  deal  better  than  theirs. 

Yours  truly, 

H.  W.  Bom 
Mr.  J.  Ogden  Armour,  City  Office.  ~ 

The  way  in  which  Swift  &  Co.  proceeds  when  a  Government 
limitation  of  profits  is  expected  is  shown  by  the  following  letter,  in 
which  Louis  F.  Swift  writes  to  his  brother,  Ed.  F.  Swift,  stating  that 
he  has  learned  that  the  Government  expects  to  establish  profit 
control  in  the  leather  industry  and  suggesting  the  advisability  of 
reappraising  their  properties  in  certain  companies.  Edward  F. 
replies: 

I  approve,  if  done  quietly  and  promptly. 

E.  F.  S. 


86       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

The  letter  with  marginal  direction  is  as  follows: 

GOVERNMENT  CONTROL— LEATHER  COMPANIES. 

Chicago,  November  26,  1917. 
Mr.  Edward  F.  Swift,  Second  floor. 

We  have  had  a  virtual  statement  from  Mr.  Cotton  that  the  Govern- 
ment expects  to  establish  profit  control  in  the  leather  industry.  With 
this  notice,  I  think  we  should  at  least  consider  the  advisability  of  re- 
appraising the  properties  of  the  following  companies :  A.  C.  Lawrence 
Leather  Co.,  National  Calfskin  Co.,  Winchester  Tannery  Co.,  St.  Paul 
Tannery  Co.,  Ashland  Leather  Co.,  St.  Joseph  Tanning  Co.  (in  which 
we  have  only  50  per  cent,  ownership). 

If  it  is  agreeable  to  you,  will  arrange  with  Mr.  Moon  to  go  into 
the  matter  and  submit  figures.    Awaiting  your  reply, 

Louis  F.  Swift. 

FLOUR 

The  flour  millers  have  had  unusual  profits  for  considerably  more 
than  a  year.  Information  collected  and  verified  by  the  commission 
shows  that  for  the  four  years  ending  June  30,  19 16,  a  profit  of  13^ 
cents  on  each  barrel  of  flour  and  12  per  cent  on  the  capital  invest- 
ment. These  figures  came  from  accounts  covering  nearly  40,000,000 
barrels  output  annually.  This  is  somewhat  less  than  40  per  cent  of 
the  annual  output  of  the  whole  country  but  a  very  much  larger  part 
of  the  flour  sold  in  the  regular  commercial  market. 

In  other  words,  these  figures  apply  to  mills  that  in  large  part 
supply  the  demand  for  flour  in  interstate  commerce  and  for  export. 
The  years  covered  1913-1916,  and  should  probably  be  accepted  as 
fairly  representative  in  spite  of  the  fact  that  the  war  demand  in  191 5 
and  191 6  would  lead  one  to  expect  them  to  show  an  abnormally  high 
profit. 

In  the  year  ending  June  30,  191 7,  these  same  mills  made  an  aver- 
age of  52  cents  on  each  barrel  of  flour  sold,  and  nearly  38  per  cent 
on  their  investment,  profits  that  are  indefensible,  considering  that  an 
average  of  the  profit  of  one  mill  for  six  months  of  the  year  shows  as 
high  as  $2  per  barrel. 

The  commission  has  tabulated  returns  covering  the  sale  of  some- 
thing over  4,000,000  barrels  of  flour  made  and  sold  under  the  Food 
Administration's  regulations  from  September,  191 7,  to  March,  19 18, 
inclusive.  In  face  of  the  regulation  of  25  cents  per  barrel  maximum, 
the  average  profit  per  barrel  on  this  flour  was  about  45  cents  or  over 
three  times  the  normal  profit  per  barrel  referred  to  above.  The 
return  on  investment  was  apparently  between  25  and  30  per  cent. 
However,  with  prices  maintained  at  the  same  levels  cost  would 


THE  PRICE  SYSTEM 


87 


probably  have  increased  and  profit  would  have  been  somewhat 
reduced  in  April,  May,  and  June,  1918,  because  of  the  smaller  output 
in  those  months.  The  average  net  profit  of  jobbers  reporting  to  the 
commission  was  about  15  cents  per  barrel  for  1913  and  19 14,  but 
increased  to  nearly  50  cents  in  the  first  half  of  19 17.  These  profits 
include  all  the  pay  received  by  the  proprietors  of  the  business  for 
their  services.  It  is  clear  that  if  the  profit  above  such  pay  was 
reasonably  high  in  19 13  and  19 14,  it  was  exorbitant  in  the  first  half 
of  191 7.  The  Food  Administration  has  succeeded  in  reducing  the 
profit  of  these  concerns,  but  for  the  year  19 17  it  was  still  over  twice 
as  high  as  in  the  earlier  years. . . . 

SALARIES  AND  BONUSES 

Below  are  given  the  payments  in  salaries  and  commissions  which 
were  made  in  19 17  for  services  rendered  by  the  American  Metal  Co. 
(Ltd.),  New  York.  These  payments  are  reported  as  being  made 
exclusively  for  services  in  their  capacity  as  described  below,  and 
charged  in  all  cases  to  expense  account: 


Salaries  and  Commission. 
OFFICERS  AND   MANAGERS. 


Name  of  Payee. 

Address. 

Position. 

Total  Pay- 
ment. 

B.  Hochschild 

C.  M.  Loeb 

61  Broadway,  New- 
York. 
do 

Chairman  of  board  of  directors.  . . . 

f179.663.36 

364,326.73 
221,596.04 

147.930.69 

86,342.90 

82,810.23 
77,710.23 
51.810.23 
52,710.23 

Otto  Sussman 

do 

Vice  president,  chief  mining  depart- 
ment. 

Vice  president,  chief  sales  depart- 
ment. 

Director  and  treasurer  to  June  30, 
1917. 

J.  Loeb 

do 

T.  Sternfeld 

126  West  Seventy- 
fourth        Street, 
New  York. 
61  Broadway,  New 

York. 
do 

Julian  B.  Beaty 

Director  and  treasurer  since  June 
30,  1917. 

Vice  president,  chief  South  Amer- 
ican department. 

Director    and    chief    of    zinc    ore 
department. 

Cashier  and  custodian  of  securities. 

Chief  auditor  and  accountant 

H.  K.  Hochschild.... 
H.  v.  Putzel 

do 

do 

do 

S.  Aclcr 

.     ...    do    

79  065.35 

H.  BemstorS 

do 

Sol  Roos 

1625         Boatmen's 
Bank      Building, 
St.  Louis,  Mo. 

82s    A.    C.    Foster 
Building,  Denver, 
Colo. 

1625        Boatmen's 
Bank      Building, 
St.  Louis,  Mo. 

148,530.69 

M.  Schott 

136,553.12 

Wm.  Simon 

Assistant  manager,  St.  Louis  office . 

38,155.11 

88       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


Salaries  and  Commission — Continued. 
MANAGERS  AND    EMPLOYEES. 


Name  of  Payee. 


Address. 


W.  E.  Brady 6i  Broadway,  New. 

York. 


W.  H.  Brady do 

H.  N.  Burkey do 

M.  Fauquembergue do 

John  Fornfinne do 

Gustav  Leers do 

B.  F.  Phillipson do 

E.  T.  Villareal do 

Hans  Schild do 

Wm.  Weidowke do 

John  MacLetchie do 

B.  N.  Zimmer 22S7  Henry  Oliver 

Building,     Pitts- 
burgh, Pa. 

H.  L.  Brown 82s    A.    C.    Foster 

Building,  Denver, 
Colo. 

r.  D.  Weeks Canandaigua,  N.  Y. 

C.  E.  Kayser 406  First  National 

Bank     Building, 
Bartlesville,  Okla. 


Position. 


Manager  of  transportation  depart- 
ment (now  A.  M.  Metal  Trans- 
portation Co.) 

Assistant  cashier 

Metallurgical  department 

Chief  clerk  sales  department 

Assistant  traffic  manager 

Traffic  manager 

Assistant  manager  ore  department. 

Manager  foreign  metals  department 

Bookkeeper 

Clerk  zinc-ore  department 

Auditor  for  subsidiary  corps 

Manager  Pittsburgh  office  and 
Langeloth  Works. 

Mining  engineer,  Denver,  office...  . 


Chief  manager  engineer  (resigned) 
Manager  gas  operations 


Total  Pay- 
ment. 


Jii,8oo.oo 


9,300.00 

5,200.00 

9,300.00 

7,400.00 

9,150.00 

9,600.00 

12,200.00 

6,190.00 

5,850.00 

12,800.00 

10,800.00 


6,350.00 


23,500.00 
7,000.00 


The  foregoing  is  as  complete  a  reply  to  the  Senate's  question  as 
the  commission  has  been  able  to  prepare  during  the  time  at  its  dis- 
posal. It  must  be  stated  that  the  instances  cited  are  by  no  means 
a  complete  catalogue. 

All  of  which  is  in  support  of  the  statement  of  the  President,  when, 
in  his  address  to  a  joint  session  of  Congress  on  May  27,  1918,  he 
said: 


The  profiteering  that  can  not  be  got  at  by  the  restraints  of  con- 
science and  love  of  country  can  be  got  at  by  taxation.  There  is  such 
profiteering  now,  and  the  information  with  regard  to  it  is  available 
and  indisputable. 

The  Federal  Trade  Commission, 
William  B.  Colver,  Chairman, 
John  Franklin  Fort,  Vice  Chairtnan, 
ViCTOB  Murdock. 


IV.    THE   DIRECTION   OF   INDUSTRY 


I.    THE   WAGE   SYSTEM   AND   INDUSTRIAL   POWER 

G.  D,  H.  Cole:  Self -Government  in  Industry* 
(pp.  154-7,  163,  170-3,  177-8,  185) 

There  are  four  distinguishing  marks  of  the  wage  system.  .  .  . 

1.  The  wage  system  abstracts  "labor"  from  the  laborer,  so  that 
one  can  be  bought  and  sold  without  the  other. 

2.  Consequently,  wages  are  paid  to  the  wage- worker  only  when  it 
is  profitable  to  the  capitalist  to  employ  his  labor. 

3.  The  wage- worker,  in  return  for  his  wage,  surrenders  all  control 
over  the  organization  of  production. 

4.  The  wage-worker,  in  return  for  his  wage,  surrenders  all  claim 
upon  the  product  of  his  labor.  .    .    . 

I  want  now  to  turn  to  the  examination  of  the  first  of  the  four 
diseases  which  afflict  the  industrial  system,  and  to  the  remedies 
proposed.  It  is  the  essence  of  wage-slavery  that  it  abstracts 
labor  from  the  laborer  and  countenances  trafiic  in  labor  while  it  no 
longer  permits  traffic  in  men. 

There  was  a  time  when  this  abstraction  seemed  to  those  who 
fought  to  bring  it  about  the  realization  of  human  freedom  and 
equality.  No  longer,  they  proudly  proclaimed,  could  man  be 
treated  as  a  commodity,  devoid  of  rights,  to  be  bought  and  sold  in 
the  market  for  a  price,  and  to  be  owned  and  controlled  absolutely 
by  his  lord  and  buyer.  The  world  put  away  chattel-slavery  as 
an  unclean  thing,  and  in  name  made  all  men  equal  before  the  law. 
But  it  did  not  make  the  law  itself  equal  before  men;  nor  could  it 
make  men  equal  before  capital. 

To  chattel-slavery,  therefore,  succeeded  "the  economy  of  wages," 
forerunner  of  the  "economy  of  high  wages."  The  employing  class 
easily  reconciled  itself  to  the  loss  of  ownership  over  men,  when  it 
found  the  hiring  of  their  labor  a  cheaper  and  more  efficient  instru- 
ment for  the  making  of  profits.  The  landlord  readily  acquiesced 
in  the  emancipation  of  the  serf  when  he  saw  that  thereby  he  escaped 
the  responsibilities  of  land  holding,  and  gained  his  freedom  to  ex- 
ploit his  land  at  will.  In  short,  under  chattel-slavery  and  serfdom 
the  ownership  of  capital  and  labor  was  in  the  same  hands;  for  the 
*  Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 

91 


92       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

rich  man  effectively  owned  both  land  and  capital,  labor  and  the 
laborer.  The  wage-system  has  changed  all  that  by  divorcing  the 
ownership  of  land  and  capital ;  for  it  has  left  capital  in  the  hands  of 
the  few,  and  has  made  of  the  many  a  class  that  possesses  nothing 
save  its  own  labor.  .  .  .  They  who  own  both  capital  and  the 
laborer  exercise  an  indisputable  control  over  both:  they  who  own 
only  labor  must  sell  their  labor  to  the  owners  of  capital;  they  who 
own  capital  continue  to  control,  though  not  to  own,  the  laborers. 
There  is,  therefore,  no  way  out  of  the  wage  system  by  a  mere 
reuniting  of  labor  and  the  laborer;  the  only  way  out  is  for  the 
laborer  to  secure  control  of  capital  as  well  as  labor 

The  inevitable  result  of  the  divorce  of  ownership  of  labor  and 
capital  has  been  the  loss  of  security  by  the  wage-earner.  Speak- 
ing broadly,  the  slave  was  secure;  his  job  was  continuous,  and  his 
master  was  obliged  to  maintain  him  in  employment  and  in  unemploy- 
ment, in  sickness  and  in  health.  This  security,  which  was  a  security 
without  rights  based  upon  the  denial  of  freedom,  the  wage-system 
swept  away.  For  an  actual  security  based  upon  bondage  it  sub- 
stituted a  no  less  actual  insecurity  based  upon  an  incomplete  personal 
freedom.  Our  problem  to-day  is  that  of  reestablishing  security 
without  reinstituting  virtual  chattel-slavery.  .  .  . 

The  workman  must  get  security,  not  as  an  employee  of  such 
and  such  a  factory,  but  as  a  member  of  the  industry  in  which  he 
works.  This  is  the  path  of  industrial  autonomy;  and,  if  this  is 
followed,  it  will  be  a  long  step  toward  the  abolition  of  the  wage- 
system,  though  it  will  not  by  itself  abolish  that  system.  Ultimately, 
the  control  of  employment  and  unemployment,  and  complete  re- 
sponsibility for  the  workers  in  sickness  and  in  health,  must  pass  to 
the  Guilds;  but  the  most  we  can  hope  for  at  present  is  a  system 
in  which  the  worker's  right  to  security  is  recognized,  and  in  which, 
without  any  sacrifice  of  freedom,  he  plays  a  controlling  part  in  the 
administration  of  the  means  to  that  security.   .    .    . 

Now,  capitalists  to-day  enjoy  rent,  interest  and  profits  by 
virtue  of  their  control  over  two  spheres  of  industrial  activity,  produc- 
tion and  exchange.  The  former,  which  is  the  control  of  the  produc- 
tive processes,  is  the  subject  of  this  section;  the  latter,  which  is  the 
control  of  raw  material  and  the  finished  product,  will  be  dealt  with 
in  the  next  section  of  this  chapter.  In  both  spheres  capitalist  con- 
trol is  largely  exercised  through  others.  These  others  are  the  man- 
agement, sometimes  pure  salary-earners,  sometimes  also  profit- 
sharers  on  commission,  or  share-holders  in  the  business.  At  present, 
these  managers,  of  all  grades  from  foremen  up  to  the  great  managing 
directors  of  huge  combines,  are  the  servants  of  the  capitalist  class, 


THE  DIRECTION  OF  INDUSTRY  93 

who  do  their  bidding,  and  maintain  in  their  interest  the  autocratic 
control  of  industry 

This  means  that,  before  capitalism  can  be  overthrown,  there 
must  be  wrested  from  it  both  its  control  of  production  and  its 
control  of  exchange.  This  done,  the  abolition  of  its  claim  to  rent, 
interest  and  profits  v/ill  follow  as  a  matter  of  course. 

The  obvious  striking  point  for  labor  to-day  is  the  workshop.  The 
assumption  by  the  trade  unions  of  workshop  control  would  not  de- 
stroy rent,  interest  and  profits,  but  it  would  be  a  shrewd  blow  struck 
at  the  roots  from  which  they  spring.  This  is  its  fundamental  import 
for  labor  at  the  present  time. 

I  come  now  to  what  is,  I  confess,  by  far  the  most  difficult 
of  the  tasks  which  Labor  must  accomplish  if  a  free  Society  is  to 
replace  the  wage-system.  It  will  not  be  easy  for  Labor  to  secure 
control  of  production;  but  it  will  be  far  more  difficult  for  it  to  secure 
control  of  the  product.    .    .    . 

Capitalist  control  of  the  product  has  three  principal  aspects.  It 
is  expressed  in  the  financial  system  by  which  the  great  investors 
and  syndicates  regulate  the  flow  of  capital;  in  the  control  of  raw 
materials — buying;  and  in  the  control  of  the  finished  product — sell- 
ing. Investing,  buying  and  selling,  even  m.ore  than  producing,  does 
capitalism  lay  waste  Society.    .    .    . 

First  there  are  the  great  capitalists,  or  owners  of  money  power. 
Sometimes  these  capitalists  confine  their  operations  to  a  single  in- 
dustry, sometimes  their  operation  extends  over  many  industries, 
sometimes  they  are  pure  financiers,  whose  relation  to  industry  is 
indirect,  sometimes  they  are  merchants,  whose  sole  business  is  buying 
and  selling. 

Secondly,  there  are  the  small  employers,  capitalists  too,  but  not 
powers  in  the  financial  sphere.  These  men  are  mainly  producers, 
or  smaller  merchants,  managing,  as  a  rule,  their  own  businesses,  and 
striving  to  extract  a  profit  for  themselves. 

Thirdly,  there  are  managing  directors,  associated  with  big  busi- 
nesses, industrial,  commercial  or  financial,  but  not  themselves  owning 
any  great  share  in  the  capital  which  they  manipulate. 

The  economic  world  is  increasingly  dominated  by  the  first  of 
these  classes.  The  financier,  with  capital  to  invest,  is  the  supreme 
power  behind  the  capitalist  throne.  In  industry,  where  large  scale 
production  is  the  rule,  the  great  industrialist  increasingly  dominates 
the  smaller  employer;  where  small-scale  production  continues,  as  in 
the  woolen  industry,  the  merchant  is  supreme,  and  constantly  sub- 
ordinates the  interests  of  the  producing  employers  to  his  own.   .    .    , 

In  any  case,  whether  the  employer  originally  confronted 
be  large  or  small,  dependent  or  independent,  Labor  will  sooner 


94       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

or  later  find  itself  confronted  with  "big  business."  It  will  have 
nominal  control  of  the  workshops,  and,  in  some  cases,  of  the  works 
as  well;  but  it  will  find  itself,  as  the  smaller  employers  are  finding 
themselves  to-day,  still  subject  to  the  dominion  of  the  big  indus- 
trialists and  merchants,  who  control  the  raw  materials  of  industry, 
and  the  disposal  of  the  finished  product. 

Judge  E.  H,  Gary:  Commencement  Address  at  Trinity 
College,  Hartford  * 

"Fortunately  the  large  majority  of  wage  earners  cannot  be  in- 
fluenced by  considerations  that  are  base  or  unreasonable.  This  is 
especially  true  in  the  United  States. 

"It  may  be  useful  to  bear  in  mind  that  in  trying  to  arrive  at  a 
wise  and  just  conclusion  regarding  the  rights  of  the  workmen,  the  in- 
terests of  four  general  groups  must  be  considered,  viz.:  Labor,  capital 
or  em.ployer,  the  consumer,  and  that  part  of  the  general  public  not 
included  in  the  divisions  specifically  mentioned.  None  of  these 
should  be  overlooked,  each  must  be  fully  protected  within  reason 
and  justice.  .  .  .  Whenever  labor  receives  increases  in  wages, 
or  other  pecuniary  advantages,  the  amount  must  be  charged  to  and 
paid  by  the  consumer,  provided  capital  is  not  receiving  more  than 
it  is  entitled  to  receive.  Consequently  the  question  of  selling  prices 
or  v/ages  in  many  cases  practically  relates  only  to  the  laborer  and  the 
consumer.  In  estimating  the  cost  of  production  from  the  raw  ma- 
terial it  should  be  borne  in  mind  that  85  or  90  per  cent  of  the  total 
is  confined  to  the  sum  paid  for  labor.  If  capital  or  labor  is  re- 
ceiving a  larger  return  than  it  ought  to  have  the  excess  is  provided 
by  the  consumer  in  paying  improper  prices.  There  should  always 
be  maintained  a  fair  and  reasonable  equilibrium,  taking  into  ac- 
count all  the  circumstances.   .    .    . 

In  considering  the  relationship  between  employers  and  employees 
the  welfare  of  the  latter  is  of  the  highest  importance,  not  alone  be- 
cause it  is  right,  though  that  is  reason  enough,  but  also  because  it 
is  for  the  benefit  of  the  employers  themselves.  These  groups  are 
associated  for  mutual  profit.  They  succeed  or  fail  together.  Each 
has  obligations  and  responsibilities.  They  are  not  and  should  not 
be  considered  partners  in  the  sense  of  being  entitled  to  the  control 
of  the  business  in  question  or  to  participate  in  the  return  on  the 
capital  invested,  except  to  the  extent  of  contribution  by  each  to  such 
capital,  for  otherwise  one  would  share  in  benefits  without  sharing 
in  the  hazard  of  investment.     Prospective  profits  furnish  the  incen- 

*  Reprinted  by  permission  from  the  Commercial  and  Financial  Chron- 
ickj  June  28,  1919.     Published  by  William  B.  Dana  Co.,  New  York. 


THE  DIRECTION  OF  INDUSTRY  95 

tive  to  embark  in  enterprise  and  to  risk  capital.  To  the  extent  this 
is  removed  or  hampered  to  a  corresponding  degree  will  capital  be 
withheld  or  diverted  and  economic  activity  diminished. 

But  there  are  many  things  the  employee  is  justly  entitled  to. 
There  is  due  him  fair  and  reasonable  compensation,  depending  upon 
all  the  circumstances  surrounding  the  employment.  The  times, 
places,  services,  and  results  of  operation  are  important  to  be  con- 
sidered. Necessarily  and  properly  the  question  of  supply  and  de- 
mand is,  and  always  will  be  a  factor  in  determining  prices  of  labor, 
as  it  is  in  dealing  with  commodities.  This  is  elementary  and 
healthy;  but  there  are  other  things  of  equal  importance.  When 
there  is  a  well  grounded  doubt  in  regard  to  wage  rates  it  should 
be  resolved  in  favor  of  the  employee. 

The  workmen  ought  in  some  form  to  be  offered  opportunity  to 
invest  on  favorable  terms  in  the  business  inaugurated  by  the  em- 
ploj'^er.  This  encourages  thoughtful  attention  and  endeavor  to  econ- 
omize and  save.  It  makes  the  wage  earner  an  actual  partner  in  the 
business  of  the  concern  with  which  he  is  associated;  a  real  cap- 
italist.   .    .    . 

Every  employee  should  have  the  chance  to  progress  from  one 
position  to  another,  depending  upon  his  merits.  The  average  work- 
man does  not  wish  to  remain  in  the  lower  grades  of  employment 
or  to  bring  to  this  level  others  filling  better  positions.  He  desires 
full  and  fair  opportunity  to  occupy  higher  and  still  higher  places, 
based  on  efficiency  and  faithfulness. 

Federal  Commission  on  Industrial  Relations,  Final 
Report,  1915 

Mr.  John  H.  Walker,  President  of  the  Illinois  Federation  of 
Labor:  "A  workingman  is  not  supposed  to  ask  anything  more  than 
a  fair  day's  wage  for  a  fair  day's  work;  he  is  supposed  to  work 
until  he  is  pretty  fairly  tuckered  out,  say  eight  hours,  and  when  he 
does  a  fair  day's  work,  he  is  not  supposed  to  ask  for  any  more  wages 
than  enough  to  support  his  family,  while  with  the  business  man,  the 
amount  of  labor  furnishes  no  criterion  for  the  amount  they  receive. 
People  accept  it  as  all  right  if  they  do  not  do  any  work  at  all,  and 
accept  it  as  all  right  that  they  can  get  as  much  money  as  they  can; 
in  fact,  they  are  given  credit  for  getting  the  greatest  amount  of 
money  with  the  least  amount  of  work;  and  those  things  that  are 
being  accepted  by  the  other  side  as  the  things  that  govern  in  every 
day  life,  and  as  being  right,  have  brought  about  this  condition,  this 


96       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

being  in  my  judgment  absolutely  unfair;  that  is,  on  the  merits  of 
the  proposition  in  dealing  with  the  workers. 

The  workers  feel  this,  some  unconsciously  and  some  consciously, 
but  all  of  them  feel  it,  and  it  makes  for  unrest,  in  my  judgment,  and 
there  can  be  no  peace  while  that  condition  obtains." 


2.    ABSENTEE  OWNERSHIP 

Report  of  Bresidenfs  Mediation  Commission  to  the 
President  of  the  United  States,  January  9,  1918 

Signed  by  W.  B.  Wilson,  Secretary  of  Labor  of  United  States; 
Ernest  P.  Marsh,  Verner  Z.  Reed,  Jackson  L.  Spanglcr,  John  H. 
Walker,  Felix  Frankfurter,  Secretary  and  Counsel;  Max  Low- 
enthal,  Assistant  Secretary. 

About  28  per  cent  of  the  total  copper  output  of  the  United 
States  is  produced  in  the  four  copper  districts  of  Arizona  dealt  with 
by  the  commission.  In  the  early  autumn  of  191 7  strikes  becanie  wide- 
spread in  these  centers,  resulting,  through  the  total  and  partial  shut 
down  of  the  mines  extending  for  a  period  of  over  three  months,  in  a 
loss  of  100,000,000  pounds  of  copper.   ... 

.  .  ,  Distant  ownership,  wholly  apart  from  its  tendency  to  di- 
vorce income  from  the  responsibility  for  the  conditions  under  which 
it  is  acquired,  creates  barriers  against  the  opportunity  of  understand- 
ing the  labor  aspects,  the  human  problems,  of  the  industry,  and  soli- 
darity of  interest  among  the  various  owners,  checks  the  views  of  nny 
one  liberal  owner  from  prevailing  against  the  autocratic  policy  of  the 
majority.  The  resident  management  of  the  mines  is  wholly  tradi- 
tional in  its  effect,  however  sincere  its  purpose.  The  managers  fail 
to  understand  and  reach  the  mind  and  heart  of  labor  because  they 
have  not  the  aptitude  or  the  training  or  the  time  for  wise 
dealing  with  the  problems  of  industrial  relationship.  The 
managers  are  technical  men,  mining  engineers  of  knowledge  and  skill. 
There  is  no  responsible  executive  whose  sole  function  it  is  to  deal 
with  labor  problems.  In  fact  it  has  hardly  begun  to  be  realized  that 
labor  questions  call  for  the  same  systematic  attention  and  under- 
standing and  skill  as  do  engineering  problems.   .    .    . 

Samuel  Untermyer:  Address  before  American  Bank- 
ers Convention,  1918  * 

.  .  .  The  ownership  of  these  [railroad]  properties  does  not 
rest  to  any  extent  in  the  hands  of  their  officers  and  directors.     I 

*  Reprinted  by  permission  from  Supplement  to  Comniercia!  and  Finan- 
cial Chronicle.    Published  by  William  B.  Dana  Co.,  New  York. 

97 


98       CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

venture  to  say  that  all  of  them  do  not  own  anything  like  as  much 
as  one  per  cent  of  the  securities  of  the  roads  they  are  administering. 
The  ownership  of  the  remaining  ninety-nine  per  cent  and  upwards 
is  scattered  among  50,000,000  people  or  about  one  half  the  popu- 
lation of  the  country,  distributed  approximately  as  follows: 

There  are  more  than  33,000,000  industrial  and  agricultural  work- 
ers in  the  United  States  to  whom  solely  and  directly  belong  the  rail- 
road securities  that  are  held  by  the  industrial  life  insurance  com- 
panies that  have  outsanding  policies  held  at  by  that  number  of 
human  beings  (unduplicated)  against  death  and  casualty;  there  are 
additional  life  insurance  policies  held  by  well  upwards  of  3,000,000 
people  for  larger  sums,  in  what  are  known  as  the  "old  line"  life 
insurance  companies  such  as  the  Mutual,  New  York,  Equitable, 
Home,  Connecticut,  Northwestern,  etc.  All  of  these  are  now  mutual 
companies.  No  one  other  than  the  policy-holders  has  any  interest 
in  them.  These  companies  hold  billions  of  dollars  of  railroad  se- 
curities for  their  policy  holders,  bought  with  the  money  belonging 
to  the  latter  and  out  of  which  these  death  and  accident  claims  must 
be  paid.  All  insurance  rates  of  premiums  are  based  upon  the 
stability  and  maintenance  of  the  values  of  these  securities.  The  very 
solvency  and  existence  of  the  companies  depend  upon  maintaining 
these  values.  There  are  upwards  of  10,000,000  depositors  in  the 
savings  banks  in  the  same  situation,  whose  sole  safety  rests  upon 
these  securities.  When  to  these  figures  are  added  the  individual 
holders  of  railroad  bonds  and  stocks  throughout  the  country,  the 
amounts  held  by  the  State  and  National  Banks  and  Trust  Com- 
panies, Fire,  Casualty  and  other  Institutions,  by  the  Universities 
and  Colleges,  it  will  be  seen  that  the  statement  of  the  number  of 
persons  interested  in  railroad  securities  is  ultra-conservative  and 
that  the  National  credit  and  stability  are  inextricably  involved  in 
their  fate,  to  an  extent  that  was  little  realized  until  the  taking  over 
of  the  operation  of  the  roads  forced  a  study  of  the  subject. 

Final  Report  Federal  Commission  on  Industrial 
Relations,  1915 

The  typical  form  of  industrial  organization  is  the  corporation. 
In  transportation  approximately  100  per  cent  of  the  wage  earners 
are  emplo3^ed  by  corporations;  in  mining,  90  per  cent,  and  in  manu- 
facturing, 75  per  cent.  Moreover,  it  is  under  this  form  that  the 
great  problems  of  industrial  relations  have  been  developed. 

The  actual  relationship  which  exists  between  employers  and 
employees  under  the  artificial  conditions  which  characterize  the  cor- 
porate form  of  organization  can  not  J3e  understood  without  an  analy- 


THE  DIRECTION  OF  INDUSTRY  99 

sis  of  the  powers,  functions,  and  responsibilities  of  the  different  ele- 
ments which  go  to  make  up  the  typical  corporation.  The  actual 
ownership  of  a  corporation  is  vested  in  the  stockholders  and  bond- 
holders, whose  only  interest  in  the  industry  is  represented  by  cer- 
tificates upon  the  basis  of  which  they  expect  the  payment  of  in- 
terest or  dividends  at  stated  intervals. 

The  control  of  the  property  so  far  as  operation  is  concerned, 
rests  finally  with  the  stockholders,  or  with  some  particular  class  of 
stockholders  whose  shares  entitle  them  to  vote.  The  stockholders, 
however,  act  through  the  board  of  directors,  who  are  usually  elected 
in  such  a  way  that  they  represent  only  the  dominant  interest.  As 
far  as  the  organization  of  the  corporation  is  concerned,  the  principal 
function  of  the  board  of  directors  is  to  select  the  executive  officials. 
These  executive  officials,  either  directly  or  indirectly,  select  the 
numerous  superintendents,  foremen  and  petty  bosses  by  whom  the 
direct  operation  of  the  enterprise  is  managed  and  through  whom  all 
the  workers  are  hired,  discharged  and  disciplined. 

This  is  a  skeleton  of  corporate  organization.  To  understand  its 
operations  it  is  necessary  to  examine  the  functions  and  responsi- 
bilities of  the  different  parts  of  the  organization. 

Theoretically  and  legally,  the  final  control  and  responsibility 
rests  with  the  stockholders,  but  in  actual  practice  a  very  different 
situation  is  found.  The  relationship  of  stockholders  to  a  corporation 
is  anything  but  permanent;  in  a  busy  week  on  Wall  Street,  the  num- 
ber of  shares  bought  and  sold  in  one  of  the  great  corporations  will 
greatly  exceed  the  total  number  of  shares  that  are  in  existence.  The 
stockholders  as  a  class,  therefore,  have  no  guiding  interest  in  the 
permanent  efficiency  of  the  corporation  as  regards  either  the  preser- 
vation of  its  physical  property  or  the  maintenance  of  an  efficient  pro- 
ductive organization.  Stocks  are  bought  either  as  a  speculation  or 
an  investment,  and  in  case  either  the  physical  property  deteriorates 
or  the  productive  organization  tends  to  become  inefficient,  the  well- 
inform.ed  stockholder  generally  takes  no  steps  to  correct  the  condi- 
tion, but  merely  throws  his  stock  upon  the  market.  This  marks  a 
very  real  and  definite  distinction  from  the  actual  ownership  of  a 
property  or  business  which  must  be  kept  in  good  condition  by  its 
owner  as  regards  both  plant  and  organization.  If  all  industries  were 
owned  and  operated  by  individuals,  there  might  be  some  reason  to 
hope  that  generally  satisfactory  wages  and  physical  conditions  might 
be  attained  through  the  education  of  the  owner  to  a  realization  that 
permanent  success  depended  absolutely  upon  the  maintenance  of  the 
plant  in  the  best  condition  and  the  permanent  satisfaction  of  the 
legitimate  demands  of  the  workers,  but  with  the  impersonal,  remote 
and  irresponsible  status  of  control  by  stock  ownership,  such  a  hope 


loo     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

must  be  purely  illusory.  The  ordinary  stockholder  in  a  large  cor- 
poration actually  occupies  a  less  direct  relationship  to  the  corpora- 
tion in  which  he  is  interested,  has  less  knowledge  of  its  actual 
operations,  and  less  control  over  its  management,  than  the  ordinary 
citizen  has  over  local,  state  and  national  governments. 

Boards  of  directors  in  theory  are  responsible  for  and  would 
naturally  be  expected  to  maintain  supervision  over  every  phase  of  the 
corporation's  management,  but,  as  a  matter  of  fact,  we  know  that 
such  supervision  is  maintained  only  over  the  financial  phase  of  ihe 
business,  controlling  the  acquisition  of  money  to  operate  the  business 
and  distributing  the  profits.  Actual  direction  generally  exists  only 
through  the  removal  of  executive  officials  who  fail  to  deliver  the 
expected  profits,  and  through  the  appointment  of  their  successors. 

Upon  the  testimony  of  financiers  representing,  as  directors,  hun- 
dreds of  corporations,  the  typical  director  of  large  corporations  is 
not  only  totally  ignorant  of  the  actual  operations  of  such  corpora- 
tions, whose  properties  he  seldom,  if  ever,  visits,  but  feels  and  ex- 
ercises no  responsibility  for  anything  beyond  the  financial  condition 
and  the  selection  of  executive  officials.  Upon  their  own  statements, 
these  directors  know  nothing  and  care  nothing  about  the  quality  of 
the  product,  the  condition  and  treatment  of  the  workers  from  whose 
labor  they  derive  their  income,  nor  the  general  management  of  the 
business. 

As  far  as  operation  and  actual  management  are  concerned  the 
executive  officials  are  practically  supreme.  Upon  their  orders,  pro- 
duction is  increased  or  decreased,  plants  are  operated  or  shut  down, 
upon  their  recommendations  wages  are  raised  or  lowered.  But 
even  they  have  little  direct  contact  with  the  actual  establishment  of 
working  conditions,  and  no  relation  at  all  with  the  rank  and  file  of 
the  workers.  They  act  upon  the  recommendations  of  superinten- 
dents, whose  information  comes  from  their  assistants  and  foremen 
and  from  the  elaborate  statistics  of  modern  business,  which  account 
for  every  piece  of  material  and  product,  show  the  disposition  of  every 
penny  that  comes  and  goes,  but  ignore,  as  though  they  did  not 
exist,  the  men  and  women  whose  labor  drives  the  whole  mechanism 
of  business. 

.  .  .  "The  king  can  do  no  wrong"  not  only  because  he 
is  above  the  law,  but  because  every  function  is  performed  or 
responsibility  assumed  by  his  ministers  and  agents.  Similarly  our 
Rockefellers,  Morgans,  Fricks,  Vanderbilts  and  Astors  can  do  no 
industrial  wrong,  because  all  effective  action  and  direct  responsi- 
bility is  shifted  from  them  to  the  executive  officials  who  manage 
American  industry.     As  a  basis  for  this  conclusion  we  have  the 


THE  DIRECTION  OF  INDUSTRY  loi 

testimony  of  many,  among  which,  however,  the  following  statements 
stand  out  most  clearly: 

Mr.  John  D.  Rockefeller,  Jr.: 

.  .  .  those  of  us  who  are  in  charge  there  elect  the  ablest 
and  most  upright  and  competent  men  whom  we  can  find,  in  so 
far  as  our  interests  give  us  the  opportunity  to  select,  to  have 
the  responsibility  for  the  conduct  of  the  business  in  which  we 
are  interested  as  investors.  We  can  not  pretend  to  follow  the 
business  ourselves. 

Mr.  J.  Pierpont  Morgan: 

Chairman  Walsh.  In  your  opinion  to  what  extent  are  the 
directors  of  corporations  responsible  for  the  labor  conditions  ex- 
isting in  the  industries  in  which  they  are  the  directing  power? 

Mr.  Morgan.    Not  at  all  I  should  say. 

The  similitude,  indeed,  runs  even  to  mental  attitude  and 
phrase.     Compare  these  two  statements: 

Mr.  John  D.  Rockefeller,  Jr.: 

My  appreciation  of  the  conditions  surrounding  wage  earners 
and  my  sympathy  with  every  endeavor  to  better  these  conditions 
are  as  strong  as  those  of  any  man. 

Louis  XVI: 

There  is  none  but  you  and  me  that  has  the  people's  interest 
at  heart.   .    .    . 

The  families  of  these  industrial  princes  are  already  well  estab- 
lished and  are  knit  together  not  only  by  commercial  alliances  but 
by  a  network  of  intermarriages  which  assures  harmonious  action 
whenever  their  common  interest  is  threatened. 

Thor stein  Vehlen:  Theory  of  Business  Enterprise* 
(pp.  143-147,  174) 

In  an  up-to-date  corporation  of  this  character  the  typical  make- 
up of  the  corporate  capital,  or  capitalization,  is  somewhat  as  follows: 
The  common  stock  approximately  covers  the  immaterial  properties 
of  the  concern,  unless  these  immaterial  properties  are  disproportion- 
ately large  and  valuable;  in  case  of  a  relatively  small  and  local 
corporation  the  common  stock  will  ordinarily  somewhat  more  than 
cover  the  value  of  the  immaterial  property  and  comprise  something 
of  the  plant;  in  case  of  the  larger  concerns,  the  converse  is  likely 
to  be  true,  so  that  here  the  immaterial  property,  intangible  assets, 

*  Reprinted  by  permission  of  B.  W.  Huebsch,  New  York. 


102      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

is  made  to  serve  in  some  measure  as  a  basis  for  other  securities  as 
well  as  for  the  common  stock.  The  common  stock,  typically,  rep- 
resents intangible  assets  and  is  accounted  for  by  valuable  trade- 
marks, patents,  processes,  franchises,  etc.  Whatever  material  prop- 
erties, tangible  assets,  are  in  hand  or  to  be  acquired  are  covered 
by  preferred  stock  or  other  debentures.  The  various  forms  of  de- 
bentures account  for  the  material  equipment  ay>d  the  working 
capital  (the  latter  item  corresponding  roughly  to  the  economists 
categories  of  raw  material,  wages  fund,  and  the  like).  Of  these 
debentures,  the  preferred  stock  is  the  most  characteristic  modern 
development.  It  is  de  jure,  counted  as  a  constituent  of  the 
concern's  capital  and  the  principal  is  not  repayable;  in  this  (legal) 
respect  it  is  not  an  evidence  of  debt  or  a  credit  instrument.  But 
it  has  little  voice  in  the  direction  of  the  concern's  business  policy. 
In  practice  the  management  rests  chiefly  on  the  holdings  of  common 
stock.  This  is  due  in  part  to  the  fact  that  the  preferred  bears  a 
stated  rate  of  dividends  and  is  therefore  taken  up  by  scattered  pur- 
chasers as  an  investment  security  to  a  greater  extent  than  the  com- 
mon. In  this  (practical)  respect  it  amounts  to  a  debenture.  Its 
practical  character  as  a  debenture  is  shown  by  the  stated  rate  of 
dividends,  and  where  it  is  "cumulative"  that  feature  adds  a  further 
step  of  assimilation  to  the  ordinary  class  of  debentures.  Indeed, 
in  point  of  practical  effect  preferred  stock  is  in  some  respects  a 
more  pronounced  credit  instrument  than  the  ordinary  mortgage;  it 
alienates  the  control  of  the  property  which  it  represents  more 
effectually  than  the  ordinary  bond  or  mortgage  loan,  in  that  it  may 
practically  be  a  debt  which,  by  its  own  terms,  cannot  be  collected, 
so  that  by  its  own  terms  it  may  convey  a  credit  extension  from  the 
holder  to  the  issuing  corporation  in  perpetuity.  Its  effect  is  to  con- 
vey the  discretionary  control  of  the  material  properties  which  it  is 
held  to  represent  into  the  hands  of  the  holders  of  the  common 
stock  of  the  concern.  The  discretionary  management  of  the  corpor- 
ate capital  is,  by  this  device,  quite  as  effectually,  as  by  the  use  of 
ordinary  credit  instruments,  vested  in  the  common  stock,  which  is 
held  to  represent  the  corporation's  good-will.  The  discretionary  dis- 
posal of  the  entire  capital  vests  in  securities  representing  the  in- 
tangible assets.  In  this  sense,  then,  the  nucleus  of  the  modern  cor- 
porate capitalization  is  the  immaterial  goods  covered  by  the  common 
stock. 

This  method  of  capitalization,  therefore,  effects  a  somewhat 
thoroughgoing  separation  between  the  management  and  the  owner- 
ship of  the  industrial  equipment.  Roughly  speaking,  under  cor- 
porate organization  the  owners  of  the  industrial  material  have  no 
voice  in  its  management,  and  where  preferred  stock  is  a  large  con- 


THE  DIRECTION  OF  INDUSTRY  163 

stituent  of  the  capital  this  alienation  of  control  on  the  part  of  the 
owners  may  be,  by  so  much,  irrevocable.  Preferred  stock  is,  prac- 
tically, a  device  for  placing  the  property  it  represents  in  perpetual 
trust  with  the  holders  of  the  common  stock,  and,  with  certain  quali- 
fications, these  trustees  are  not  answerable  for  the  administration  of 
the  property  to  their  trustors.  The  property  relation  of  the  owners 
to  their  property  is  at  this  point  attenuated  to  an  extreme  degree. 
For  most  business  purposes,  it  should  be  added,  the  capital  covered 
by  other  forms  of  debentures  is  in  much  the  same  position  as  that 
covered  by  the  preferred  stock.   .    .    . 

The  sublimation  of  business  capital  that  has  been  going  forward 
in  recent  times  has  grave  consequences  for  the  owners  of  property 
as  well  as  for  the  conduct  of  industry.  In  so  far  as  invested  prop- 
erty is  managed  by  the  methods  of  modern  corporation  finance,  it 
is  evident  that  the  management  is  separated  from  the  ownership  of 
the  property,  more  and  more  widely  as  the  scope  of  corporation 
finance  widens.  The  discretion,  the  management,  lies  in  the  hands  of 
the  holders  of  the  intangible  forms  of  property;  and  with  the  ex- 
tension of  corporation  methods  it  is  increasingly  true  that  this  man- 
agement, again,  centers  in  the  hands  of  those  greater  business  men 
who  hold  large  blocks  of  these  intangible  assets.  The  reach  of  a 
business  man's  discretionary  control,  under  corporation  methods,  is 
not  proportioned  simply  to  the  amount  of  his  holdings.  If  his  hold- 
ings are  relatively  small,  they  give  him  virtually  no  discretion. 
Whereas  if  they  are  relatively  large,  they  may  give  him  a  business 
discretion  of  much  more  than  a  proportionate  reach.  The  effective 
reach  of  a  business  man's  discretion  might  be  said  to  increase  as  the 
square  of  his  holdings;  although  this  is  to  be  taken  as  a  suggestive 
characterization  rather  than  as  an  exact  formula. 


3.    CONCENTRATION   AND    STATE   INTERFERENCE 

Harold  J.  Laski:  Authority  ifi  the  Modern  State  * 
(pp.  76-80,  87-95,  107-109,  115-120) 

What  is  at  least  as  evident  is  the  failure  of  recent  centralization 
to  solve  the  administrative  problems  involved.  It  is  continually 
found  that  they  are  in  fact  not  simple  and  general,  but  specialized 
and  local ;  and  the  spectacle  of  a  harassed  official  at  Washington  try- 
ing to  adjust  the  thousand  varying  strands  the  size  of  America  in- 
volves, is  not  more  exhilarating  than  to  see  how  the  Congress  permits 
of  dangerous  manipulation  in  the  interests  of  locality. 

There  is,  in  fact,  a  fundamental  principle  involved  in  such  an 
attitude  upon  which  too  much  insistence  can  hardly  be  laid.  It 
is  the  truth  that  in  administration  there  is  a  point  at  which,  for 
every  increased  attribute,  an  obvious  diminution  of  efficiency  re- 
sults. Where  a  government  department  is  overloaded  with  work 
what  it  will  tend  to  do  is  to  pay  attention  not  to  the  particular 
circumstances  of  the  special  problem  involved,  but  to  its  general 
ruling  in  broad  cases  of  the  kind.  There  is  bound  to  be  delay 
and  the  price  of  delay  in  such  matters  it  is  difficult  to  over-estimate. 
Groups,  in  fact,  must  be  treated  as  independent  units  living,  however 
minutely,  a  corporate  life  that  gives  birth  to  special  considerations. 
The  official  at  London  can  hardly  enter  so  closely  into  the  unique 
penumbra  of  a  Manchester  enquiry  as  fully  to  satisfy  it.  What 
he  will  do  is  to  look  up  the  records  of  his  department  and  apply 
some  rule  laid  down  for  similar  conditions  at  Liverpool.  This  has 
been  strikingly  illustrated  in  our  own  day  by  the  reports  of  the 
British  Commissions  on  industrial  unrest.  The  attempt,  as  the 
commissioners  for  the  North  West  discovered,  "to  regulate  every 
petty  detail  of  the  industrial  machinery  of  the  area  from  offices  at 
Whitehall  imposes  upon  the  men  who  are  asked  to  work  it  an 
impossible  task.  The  trenches  of  industrial  warfare  are  in  Lan- 
cashire ...  it  is  not  a  business  proposition  to  try  and  com- 
mand the  great  industrial  army  of  these  areas  with  a  staff  200  miles 
from  the  base  .  .  .  there  is  overcentralization  and  .  .  .  this  is  a 
cause  of  unrest.   ...  It  should  be  considered  whether  it  would 

♦  Reprinted  by  permission  of  Yale  University  Press. 

104 


THE  DIRECTION  OF  INDUSTRY  105 

be  possible  not  only  to  leave  employers  and  workmen  to  settle 
more  matters  themselves,  but  to  arrange  that  high  officials  .... 
should  live  in  the  area  and  be  within  close  touch  ...  at  the  earliest 
possible  moment."  Hardly  less  suggestive  was  the  conclusion  of  the 
American  Commission  which  had  the  same  problem  in  view.  Here, 
indeed,  the  industrial  control  was  private  and  not  public  in  nature; 
but  it  was  again  insisted  that  "distant  ownership  .  .  .  creates  bar- 
riers against  the  opportunity  of  understanding  the  labor  aspects,  the 
human  problems  of  the  industry,  and  solidarity  of  interest  among 
the  various  owners  checks  the  views  of  any  one  liberal  owner  from 
prevailing  against  the  autocratic  policy  of  the  majority."  In  a  still 
larger  industry  the  same  difficulty  is  noted.  "The  element  of  distance, 
creating  managerial  aloofness,  thus  played  a  very  important  part. 
For  the  employees,  the  labor  policy  of  'the  company'  was  what  local 
officials  in  towns  distant  from  the  executive  offices  made  it,  and  not 
what  the  general  officers  in  San  Francisco  might  have  wished  it  to 
be;  distance  insulated  the  general  offices  from  intimate  knowledge 
of  industrial  relations  of  the  company.  The  bonds  of  confidence 
and  cooperation  between  company  and  employees  were  therefore 
tenuous.  Moreover,  the  fact  that  the  company,  despite  its  bigness, 
was  part  of  a  national  system,  qualified  all  solutions  of  labor  diffi- 
culties by  consideration,  on  the  part  of  the  company,  of  the  bearing 
of  such  solution  however  intrinsically  irrelevant,  upon  other  parts 
of  the  country." 

This  is,  in  fact,  the  inherent  vice  of  centralized  authority.  It 
is  so  baffled  by  the  very  vastness  of  its  business  as  necessarily  to  be 
narrow  and  despotic  and  over-formal  in  character.  It  tends  to  sub- 
stitute for  a  real  effort  to  grapple  with  special  problems  an  attempt 
to  apply  wide  generalizations  that  are  in  fact  irrelevant.  It  involves 
the  decay  of  local  energy  by  taking  real  power  from  its  hands.  It 
puts  real  responsibility  in  a  situation  where,  from  its  very  flavor 
of  generality,  an  unreal  responsibility  is  postulated.  It  prevents  the 
saving  grace  of  experiment.  It  invites  the  congestion  of  business. 
And  all  this  is  the  more  inevitable  where,  as  in  the  modern  demo- 
cratic state,  the  responsibility  for  administration  lies  not  in  the 
hands  of  the  civil  service  but  in  the  statesmen  who  hold  office. 
What  is  thereby  engendered  is  an  attempt  not  so  much  to  provide 
solutions  as  to  evade  them.  In  a  great  strike,  for  example,  govern- 
ment arbitration  will  not  mean  so  much  a  genuine  effort  after  justice 
as  the  purchase  of  a  solution  on  any  terms.  That  is  in  the  nature 
of  things  inevitable.  Where  basic  industries  are  concerned  the  gov- 
ernment knows  full  well  the  unpopularity  that  will  attend  it  if 
there  is  any  interference  with  the  normal  process  of  consumption. 
In  industry  as  a  whole,  the  government  is,  from  the  nature  of  things, 


io6      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

interested  in  the  maintenance  of  order  and  it  knows  well  enough  that 
the  maintenance  of  order  is  in  inverse  ratio  to  the  duration  of  the 
strike.  What  it  is  driven  thus  to  do  is  to  seek  the  manipulation  of 
disharmony  that  its  credit  may  be  thereby  least  injured.  And,  at  the 
worst,  it  may  suffer  itself  to  be  used  for  the  purpose  of  one  of  the 
contending  parties.  Where  picketing,  for  instance,  is  concerned,  the 
knowledge  that  government  stands  for  a  certain  theory  of  order, 
necessarily  operates  to  minimize  the  strength  of  the  men.    .    .    . 

But  between  the  interest  of  capital  and'  that  of  labor  it  is 
difficult  to  see  any  permanent  basis  of  reconciliation.  They  want 
antithetic  things.  When  the  utmost  that  a  capitalism  can  concede 
is  measured,  it  still  falls  short  of  what  labor  demands;  for  the 
ultimate  object  of  labor  activity  is  democratic  self-government  in 
industry,  the  determination,  that  is  to  say,  of  the  methods  to  be 
employed  at  each  stage  of  the  productive  process,  the  settlement 
of  tasks  and  hours  and  wages  by  the  men  themselves.  It  involves, 
therefore,  the  disappearance  of  a  superimposed  hierarchical  control. 
It  takes  the  trade  union  as  the  single  cell  from  which  an  entirely 
new  industrial  order  is  to  be  evolved.  In  such  an  aspect,  the  sus- 
picion of  labor  towards  a  state  that  is  predominantly  capitalist  in 
character  is  inevitable.  For  whether  the  state,  through  its  instru- 
ments, seeks,  by  maintaining  order,  to  prevent  the  possibility  of  re- 
distribution; whether  it  attempts  to  discover  some  possible  basis 
of  temporary  reconciliation;  what  always  emerges  from  either  syn- 
thesis is  the  determination  of  labor  to  use  the  equilibrium  so  created 
as  the  foundation  of  a  new  effort  towards  its  ultimate  objective. 
The  method  of  which  use  is  made  may  vary  but  the  purpose  is  un- 
changing. 

Labor,  therefore,  could  admit  the  complete  sovereignty  of 
the  state  only  if  it  could  be  assumed  that  the  state  were  on  its 
side.  The  only  thing  of  which  it  can  in  this  context  be  certain  is 
that  the  power  of  the  state  will  be  predominantly  exerted  against  its 
interest.  For  the  social  order  of  the  modern  state  is  not  a  labor 
order  but  a  capitalist,  and  upon  the  broad  truth  of  Harrington's 
hypothesis  it  must  follow  that  the  main  power  is  capitalist  also. 
That  will  imply  a  refusal  on  labor's  part  to  accept  the  authority  of 
the  state  as  final  save  where  it  is  satisfied  with  its  purposes.  It 
means  that  it  will  endeavor  so  to  organize  the  process  of  produc- 
tion as  to  hand  over  the  chief  authority  therein  to  the  trade  unions 
which  express  its  interests.  It  means,  in  short,  the  conquest  of  pro- 
ductive control  by  labor;  and  when  that  control  has  been  conquered 
it  is  not  likely  that  it  will  be  easily  surrendered. 

What,  on  the  contrary,  is  possible  is  that  some  adjustment  will 
be  slowly  made  between  the  groups  which  represent  the  interests 


THE  DIRECTION  OF  INDUSTRY  107 

of  producers  and  the  state,  in  all  its  constituent  local  parts,  as  rep- 
resenting the  consumer.  We  do  not  admit,  that  is  to  say,  the  atti 
tude  of  the  anarchist  who  denies,  like  William  Godwin,  the  need 
for  authority  at  all,  or  the  attitude  of  the  syndicalist  who  emphasises 
only  the  producer's  interest.  The  case  against  syndicalism  Mr. 
Graham  Wallas  has  felicitously  expressed  in  a  single  sentence.  "It 
proved  to  be  more  important,"  he  has  written,  "that  under  syndical- 
ism men  loved  each  other  less  as  citizens  than  that  they  loved  each 
other  more  as  gild-brothers."  We  cannot,  in  fact  risk  the  possibility 
of  disorganization  upon  the  basis  of  narrow  selfishness.  However  the 
productive  process  is  in  the  future  arranged  within  itself  provision 
must  be  made  for  some  central  authority  not  less  representative  of 
production  as  a  whole  than  the  state  would  represent  consumption. 
There  is  postulated  therein  two  bodies  similar  in  character  to  a 
national  legislature.  Over-great  pressure  of  consumer  on  producer 
is  avoided  by  giving  to  the  producers  as  a  whole  a  legislature  where 
the  laws  of  production  would  be  considered.  The  legislature  of  the 
consumers  would  decide  upon  the  problems  of  supply.  Joint  ques- 
tions, in  such  a  synthesis,  are  obviously  matter  for  joint  adjustment. 
Nor  is  the  central  authority  within  either  division  to  be  envisaged 
as  uniquely  sovereign.  Certain  functional  delimitations,  the  cotton- 
trade,  the  mining  industry,  the  railways,  shipping,  immediately  sug- 
gest themselves.  From  the  consumer's  standpoint,  municipalities, 
counties,  even  whole  areas  like  the  North  of  England,  may  have 
group  demands  to  be  settled  by  group  action.  A  balance  of  internal 
powers  would  functionally  be  sought.  Arrangements  would  require  a 
system  of  collective  contracts  upon  the  basis  of  collective  bargaining. 
Law,  as  now,  would  be  matter  for  the  courts.  The  judiciary  could 
settle  a  dispute  between  a  bootmakers'  gild  and  the  authorities  of 
an  orphan  asylum  in  IVIanchester  as  well  in  one  system  as  another. 
Probably,  indeed,  a  special  system  of  industrial  courts  would  be 
developed.  Probably,  also,  just  as  in  the  United  States  a  court 
of  special  and  preeminent  dignity  decides  controversies  between 
the  separate  states,  disputes  between  a  producers'  authority  and  a 
consumers'  would  need  a  special  tribunal.  That  is  why,  as  M. 
Duguit  has  pointed  out,  jurisprudence  will  occupy  an  important 
place  in  the  federalist  society  towards  which  we  are  moving. 

THE   SIGNIFICANCE   OF    FREEDOM 

So  complex  a  division  of  powers  as  this  seems  at  first  sight  con- 
fusing to  one  accustomed  to  the  ordinary  theory  of  state-sovereignty. 
It  is  not  difficult  to  urge  that  coordination  implies  the  possibility  of 
conflict  and  to  insist  that  only  by  an  hierarchical  structure  of  au- 


io8      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

thority  can  the  danger  of  disturbance  be  minimized.  Yet  it  is,  to 
say  the  least,  tolerably  clear  that  disturbance  is  not  avoided  by  the 
conference  of  supreme  power  on  the  state.  The  rejection  of  that 
claim  to  sovereignty,  moreover,  involves  an  attitude  to  politics  which 
has  at  least  some  merit.  There  is  a  sense  in  which  the  vastest  prob- 
lem by  which  we  are  faced  is  the  very  scale  of  the  life  we  are  at- 
tempting to  live.  Its  bigness  tends  to  obscure  the  merits  of  real  free- 
dom. And,  indeed,  there  is  industrially  abroad  a  certain  suspicion 
of  liberty  against  which  safeguards  must  be  erected.  The  individual 
suffers  absorption  by  the  immensity  of  the  forces  with  which  he  is  in 
contact.  That  is  true  not  less  of  the  House  of  Commons,  of  Con- 
gress, of  the  French  chamber,  than  it  is  of  an  industry  which  has 
largely  suffered  depersonalization.  There  are  few  signs  of  that  energy 
of  the  soul  which  Aristotle  thought  the  secret  of  happiness.  There 
is  little  work  that  offers  the  opportunity  of  conscious  and  systematic 
thought.  Responsibility  tends  to  coagulate  at  a  few  centers  of 
social  life;  so  that  the  work  of  most  is  the  simple  commission  of 
orders  it  is  rarely  their  business  to  reflect  upon.  We  are  clearly 
tending  to  be  overawed  by  our  institutions;  and  we  can  perceive,  in 
a  way  different  from  the  perspective  set  by  Lecky  and  Sir  Henry 
Maine,  a  genuine  danger  lest  we  lose  hold  of  that  chiefest  source  of 
happiness.  Clerks  and  teachers  and  tenders  of  machines,  for  each 
of  whom  there  is  prescribed  a  routine  that  fills  the  most  eager  hours 
of  life,  dare  not  be  asked  for  the  effort  upon  which  new  thought  is 
founded.  An  expert  in  the  science  of  factory  management  has  even 
assumed  that  for  the  purpose  of  productivity  a  man  "who  more 
nearly  resembles  in  his  mental  make-up  the  ox  than  any  other  type" 
is  desirable.  Happiness  in  work,  which  can  alone  be  fruitful  of  ad- 
vance in  thought,  is,  as  Mr.  Wallas  has  noted,  a  phrase  for  most 
practically  without  meaning.  The  problem  to-day,  as  the  problem 
at  the  time  of  the  French  Revolution,  is  the  restoration  of  man  to 
his  place  at  the  center  of  social  life. 

That  is,  indeed,  the  real  significance  of  freedom.  It  alone  enables 
the  individuality  of  men  to  become  manifest.  But  individuality  is 
bound  to  suffer  eclipse  if  power  is  unduly  centered  at  some  single 
point  within  the  body  politic.  To  divide  it  upon  the  basis  of  the 
functions  it  is  to  perform  is  the  only  guaranty  for  the  preservation 
of  freedom.  We  too  little  remember  that  the  appearances  of  politics 
have  obscured  the  emergence  in  our  time  of  new  and  sinister  forces 
of  compulsion.  The  pursuit  of  an  ideal  of  efficiency,  for  which  in 
part  at  least  the  New  World  is  responsible,  has  led  men  to  make  a 
fetish  of  centralization.  They  have  not  seen  that  the  essence  of  free 
government  is  the  democratization  of  responsibility.  They  have  not 
realized  that  no  man  can  make  his  life  a  thing  worthy  of  himself 


THE  DIRECTION  OF  INDUSTRY  109 

without  the  possession  of  responsibility.  It  is  useless  to  respond  that 
men  are  uninterested  in  politics.  They  are  interested  in  anything 
which  nearly  touches  their  lives,  provided  only  that  they  have  a  share 
in  its  application. 

They  can  develop  that  control  only  by  preventing  the  concentra- 
tion of  power.  In  a  society  so  great  as  ours,  some  system  of  repre- 
sentation is  inevitable;  and  it  is  only  by  dividing  functions  that  we 
can  prevent  those  representatives  from  absorbing  the  life-blood  of 
the  body-politic;  exactly  as  in  France  decentralization  alone  can 
cure  the  dangerous  overprominence  of  Paris.  To  divide  industrial 
power  from  political  control  is  to  prevent  the  use  of  the  latter  in- 
fluence against  the  forces  of  change.  It  removes  the  main  lever  by 
which  the  worker  is  prevented  from  the  attainment  of  self-expression. 
It  makes  tlie  chief  well-spring  of  progress  not  the  chance  humanitar- 
ianism  the  spectacle  of  an  under-paid  employment  may  create,  but 
the  earnest  and  continuous  effort  of  the  worker.  It  thereby  gives 
to  him  a  training  in  the  business  of  government  which  otherwise 
is  painfully  lacking.  For,  after  all,  the  one  sphere  in  which  the 
worker  is  genuinely  articulate  is  the  sphere  of  production.  To  admit 
the  trade-union  to  an  effective  place  in  government,  to  insist  that 
it  is  fundamental  in  the  direction  of  production,  is  to  make  the 
worker  count  in  the  world.  He  may  be  then  also  a  tender  of 
machines;  but  where  his  trade-union  is  making  decisions  in  which 
his  own  will  is  a  part  he  is  something  more  than  a  tender  of  ma- 
chines. His  very  experience  on  this  side  of  government  will  make 
him  more  valuable  in  his  quality  as  citizen.  He  will  see  the  con- 
sumptive process  more  realistically  because  its  details  have  been 
illuminated  for  him  in  trade  union  activity.  The  very  divisions  of 
society  will  hinge  upon  the  different  aspects  of  his  own  life.  It 
is  upon  him  that  the  basis  of  the  state  must  then  be  founded.    .    .    . 

There  are  at  least  two  directions  in  which  the  danger  of  over- 
concentrating  the  power  of  the  state  has  received  a  striking  emphasis 
in  the  last  few  years.  The  necessities  of  war  have  immensely  in- 
creased the  area  of  state-control.  Social  needs  broke  down  the 
quasi-anarchy  of  a  competitive  industrial  system,  and  its  place  has 
been  taken  by  two  separate  forms  of  management.  On  the  one  hand 
we  have  the  continued  management  of  industry  by  private  enterprise, 
with,  however,  a  rigid  supervision  exerted  by  the  state.  The  danger 
here  is  obviously  immense.  The  need  of  the  state  in  war-time  has 
been  increasing  productivity  and  the  whole  orientation  of  control 
has  been  towards  that  end.  So,  even  if  rules  have  been  laid  down, 
profits  taxed,  priority  of  supply  enforced,  still  the  situation  has  in 
reality  involved  a  state  guarantee  of  the  continuance  of  the  present 
industrial  regime.    That  has  meant  an  immense  increase  of  central!- 


no     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

zation.  It  has  changed  at  a  stroke  the  whole  and  elaborate  system 
of  safeguards  by  which  labor  had  sought  protection  against  the  de- 
humanizing forces  of  capitalism.  It  does  not  seem  doubtful  that  this 
change  has  been  in  a  high  degree  beneficial.  But  it  has  had  two 
grave  results.  On  the  one  hand  there  is  the  problem  of  giving  to 
the  trade  unions  safeguards  that  shall,  in  the  new  synthesis,  be  equal 
to  the  power  of  the  old.  On  the  other  there  has  taken  place  an  im- 
mense concentration  of  capital  not  merely  in  industry  itself,  but  in 
finance  also.  Nothing  will  be  easier  in  the  years  that  lie  ahead  either 
for  the  owners  of  capital  to  demand  the  continuance  of  government 
control,  or  to  insist  that  naturalization  upon  the  basis  of  adequate 
compensation  is  alone  a  fair  return  for  its  services.  In  either  case 
we  have  a  guarantee  of  interest  made  a  fundamental  charge  upon 
the  resources  of  the  state.  That  burden,  without  a  time  limit,  may 
well  prove  a  fundamental  obstacle  to  the  democratization  of  con- 
trol. 

Nor  is  the  alternative  of  complete  state  management  more  in- 
viting. Indeed,  it  may  without  exaggeration  be  suggested  that  the 
evils  such  a.  regime  would  imply  are  hardly  less  great  than  those  of 
the  present  system.  For  to  surrender  to  government  officials  not 
merely  political  but  also  industrial  administration  is  to  create  a 
bureaucracy  more  powerful  than  the  world  has  ever  seen.  It  is  to 
apotheosize  the  potent  vices  of  a  government  department.  It  is  to 
make  certain  a  kind  of  paternalism  which,  perhaps  above  all  other 
systems,  would  prevent  the  advent  of  the  kind  of  individual  freedom 
we  desire 

Herein,  also,  we  may  discover  another  reason  for  the  division 
of  power.  The  only  way  in  which  men  can  become  accustomed 
to  the  meaning  and  content  of  political  processes  is  by  acquain- 
tance with  them.  Mr.  Graham  Wallas  has  noted  the  disappearance 
with  the  advent  of  machinery  of  the  "essentially  political  trades," 
like  tailoring  and  shoemaking,  where  production  went  on  under  con- 
ditions that  made  possible  the  organization  of  thought.  The  mod- 
ern factory  has  destroyed — for  good  or  ill — that  possibility;  and 
that  distinction  clearly  must  transfer  the  center  of  social  importance 
outside  the  factory  in  each  man's  daily  life.  But  that,  in  turn, 
involves  making  the  groups  to  which  he  belongs  politically  real  in  the 
only  sense  of  the  word  that  to-day  has  meaning.  His  groups,  that 
is  to  say,  must  become  responsible  groups;  yet  responsibility  can 
only  come  where  some 'social  function  is  definitely  entrusted  to  the 
group  for  fulfilment.  It  is  in  the  performance  of  such  tasks  that  the 
personality  of  men  obtains  its  realization.  It  is  in  such  tasks  that 
their  leisure  can  be  made  in  a  full  sense  rich  and  creative.  That  is  not 
the  case  to-day.     Everyone  who  has  engaged  in  public  work  ia 


THE  DIRECTION  OF  INDUSTRY  iii 

sooner  or  later  driven  to  admit  that  the  great  barrier  to  which  he 
finds  himself  opposed  is  indifference.  To  the  comfortable  classes  he 
is  liable  to  seem  an  "agitator";  to  the  mass  of  toiling  men  he  com- 
mits the  last  sin  of  interference.  Here,  perhaps,  there  is  a  sense  in 
which  Rousseau's  paradox  becomes  pregnant  with  new  meaning  and 
it  may  in  the  end  be  true  that  men  must  be  forced  to  be  free. 
Certain  at  least  it  is  that  the  temptations  to  leave  alone  the  real 
problems  by  which  we  are  confronted  is  almost  insuperable.  We 
make  every  provision  to  maintain  the  status  quo.  Nothing  is  more 
simple  in  the  great  society  than  to  be  lost  amongst  one's  neighbors; 
nothing  is  more  dangerous  to  the  attainment  of  the  social  end.  For 
if  the  good  life  is  one  day  to  be  achieved  by  the  majority  of  men 
and  women  it  is  only  by  the  preservation  of  individuality  that  it  can 
be  done;  and  individuality,  in  any  generous  perspective,  does  not 
mean  the  rich  and  intense  life  of  a  few  able  men. 

That  is  why,  at  every  stage  in  the  social  process,  we  are  con- 
cerned to  throw  the  business  of  judgment  upon  the  individual  mind. 
That  does  not,  it  ought  to  be  insisted,  mean  inefficient  government. 
It  does  not  mean  that  we  shall  not  trust  the  expert ;  but  it  does  mean 
the  clear  conviction  that  a  judgment  upon  the  expert  is  to  be  a 
democratic  judgment.  We  have  had  too  much  experience  of  the 
gospel  of  efficiency  to  place  any  reliance  that  is  final  upon  what 
promise  it  may  contain.  The  great  danger  to  which  it  is  ceaselessly 
exposed  is  the  eager  desire  of  achievement  and  a  resultant  careless- 
ness about  the  methods  of  its  program.  It  sacrifices  independence 
to  the  machine  much  in  the  way  that  party  discipline  aiming,  above 
all,  at  victory  at  the  polls,  sacrifices  conviction,  with  its  possibility 
of  discoveries,  to  uniformity  of  outlook.  It  becomes  at  once  im- 
patient of  the  exceptional  man  who  cannot  be  reduced  v/ithin  its 
categories;  but  sooner  or  later,  it  becomes  impatient  also  of  the 
averaf^e  man.  For  it  cannot  respect,  over  any  length  of  time,  the 
slowness  with  which  his  mind  moves,  the  curiously  intricate  avenues 
along  which  he  travels.  It  may  be  true  that  in  any  group  of  men 
oligarchical  government  is  bound,  in  the  end,  and  in  some  degree, 
to  develop;  or,  at  least,  we  need  not  deny  the  patent  virtues  of  a 
man  who  can  guide  his  fellows.  But  that  is  not  to  say  that  the  lead- 
ers are  shepherds  whom  the  flock  is  unthinkingly  to  follow.  It 
means  that  safeguards  must  be  erected  lest  the  mass  of  men  become 
mere  units  in  a  sheepfold.  It  means  the  insistence  that  liberty  con- 
sists above  all  in  the  full  opportunity  for  active  citizenship  wherever 
there  are  men  with  the  will  to  think  upon  political  problems.  It 
means  that  a  democratic  society  must  reject  the  sovereign  state  as 
by  definition  inconsistent  with  democracy. 


112     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


THE   DIRECTION   OF   EVENTS 

Such,  at  least,  seems  the  direction  in  which  the  modern  state  is 
moving.  We  stand  on  the  threshold  of  one  of  those  critical  periods 
in  the  history  of  mankind  when  the  most  fundamental  notions  pre- 
sent themselves  for  analysis.  In  England,  in  France,  and  in  America, 
it  is  already  possible  vaguely  to  discern  the  character  of  that  dissat- 
isfaction from  which  a  new  synthesis  is  ultimately  born.  The  period 
when  a  sovereign  state  was  a  necessary  article  of  faith  seems,  on  the 
whole,  to  be  passing  away 

Generalizations  about  America  are  notoriously  dangerous;  for 
it  is  tempting  to  deny  that,  in  the  European  sense,  there  is  yet  any 
such  thing  in  America  as  the  state.  Rather  is  the  observer  con- 
fronted by  a  series  of  systems  of  economic  interests  so  varied  in 
character  and,  at  tim.es,  so  baffling,  as  to  make  inquiry  almost  im- 
possible. It  is  only  viathin  the  last  generation  that  America  has 
emerged  from  the  uncritical  individualism  of  a  pioneer  civilization. 
It  is  little  more  than  a  decade  since  she  began  directly  to  influence 
the  course  of  world-politics.  Yet  even  in  a  civilization  so  new  and 
rich  in  promise  it  is  difficult  not  to  feel  that  a  critical  era  is  ap- 
proaching. The  old  party-divisions  have  become  largely  meaning- 
less. The  attempt  to  project  a  new  political  synthesis  athwart  the 
old  formulae  failed  to  command  support  enough  to  be  successful. 
Yet,  even  in  America,  that  point  of  economic  organization  has  been 
reached  where  the  emergence  of  a  proletariat  presents  the  basic 
social  problems.  A  political  democracy  confronts  the  most  power- 
ful economic  autocracy  the  world  has  ever  seen.  The  separation 
of  powers  has  broken  down.  The  relation  betw^een  executive  and 
legislature  cries  to  heaven  for  readjustment.  The  decline  of  Con- 
gress has  become  a  commonplace.  The  constituent  states  of  the 
republic  have  largely  lost  their  ancient  meaning.  New  adminis- 
trative areas  are  being  evolved.  A  patent  unrest  everywhere  de- 
mands inquiry.  Labor  is  becoming  organized  and  demanding  rec- 
ognition. The  men  who,  like  Mark  Hanna  and  Mr.  Root,  could 
stand  on  a  platform  of  simple  conservatism  are  already  obsolete. 
The  political  literature  of  America  in  the  last  fifteen  years  is  almost 
entirely  a  literature  of  protest.  Political  experimentation,  particu- 
larly in  the  West,  is  almost  feverishly  pursued.  Discontent  with 
old  ideas  was  never  more  bitter.  The  economic  background  of  the 
decisions  of  the  Supreme  Court  was  never  more  critically  examined; 
and,  indeed,  any  one  who  analyzes  the  change  from  the  narrow  in- 
dividualism of  Brewer  and  Peckham  to  the  liberalizing  scepticism  of 
Mr.  Justice  Holmes  and  the  passionate  rejection  of  the  present 


THE  DIRECTION  OF  INDUSTRY  113 

order  which  underlies  the  attitude  of  Mr.  Justice  Brandeis,  can 
hardly  doubt  the  advent  of  a  new  time. 

What,  in  a  sense,  is  being  born  is  a  realization  of  the  state;  but 
it  is  a  realization  that  is  fundamentally  different  from  anything  that 
Europe  has  thus  far  known.  For  it  starts  out  from  an  unqualified 
acceptance  of  political  democracy  and  the  basic  European  struggle 
of  the  last  hundred  years  is  thus  omitted.  So  that  it  is  bound  to 
make  a  difference  to  the  United  States  that  its  critical  epoch  should 
have  arrived  when  Europe  also  confronts  a  new  development.  Amer- 
ican economic  history  will  doubtless  repeat  on  a  vaster  scale  the 
labor  tragedies  of  the  old  world  and  think  out  new  expedients  for 
their  intensification.  But  there  are  certain  elements  in  the  Amer- 
ican problem  which  at  once  complicate  and  simplify  the  issue. 
Granted  its  corrupt  politics,  the  withdrawal  of  much  of  its  ability 
from  governmental  life,  its  exuberant  optimism,  and  a  traditional 
faith  in  the  efficacy  of  its  orthodox  political  mechanisms  that  may 
well  prove  disastrous,  there  are  yet  two  aspects  in  which  the  basis 
of  its  life  provides  opportunities  instinct  with  profound  and  hopeful 
significance.  It  can  never  be  forgotten  that  America  was  born  in 
revolution.  In  the  midst  of  its  gravest  materialism  that  origin 
has  preserved  an  idealist  faith.  It  has  made  the  thought  of  equality 
of  opportunity  and  the  belief  in  natural  rights  conceptions  that  in 
all  their  vagueness  are  yet  living  entities  no  man  may  dare  to 
neglect.  When  the  dissatisfaction  with  economic  organization  be- 
comes, as  it  is  rapidly  becoming,  acute  enough  to  take  political 
form,  it  is  upon  these  elements  that  it  will  fasten.  Americans, 
in  the  last  analysis,  believe  in  democratic  government  with  a  fierce 
intensity  that  cannot  be  denied.  They  may  often  deceive  them- 
selves about  its  forms.  They  may  often,  and  very  obviously,  suffer 
an  almost  ludicrous  perversion  of  its  expression.  The  effort  of 
their  workers  may  be  baffled  by  the  countless  nationalities  which 
have  yet  to  complete  the  process  of  Americanization.  Their  trade- 
unions  may  be  as  yet  for  the  most  part  in  a  commercial  stage.  Yet, 
from  the  confused  chaos  of  it  all,  one  clear  thread  may  be  seized. 

It  is  tov/ards  a  new  orientation  of  ideals  that  America  is  mov- 
ing. Exactly  as  in  England  and  France  challenge  has  been  issued 
to  theories  of  organization  that  have  outlived  their  usefulness. 
That  was  the  real  meaning  of  the  Progressive  Movement.  It  sym- 
bolized a  dissatisfaction  with  the  attitude  that  interpreted  happiness 
in  terms  of  the  volume  of  trade.  The  things  upon  which  interest 
become  concentrated  are  the  fundamental  elements.  It  is  the  per- 
version of  political  power  to  economic  ends  that  above  all  receives 
analysis.  The  economists  demand  a  re- valuation  of  motives.  ''Why 
should  the  masses,"  asks  an  able  recent  inquirer,  "seemingly  endowed 


114     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

with  the  power  to  determine  the  future,  have  permitted  the  develop- 
ment of  a  system  which  has  stripped  them  of  ownership,  initiative 
and  power?"  and  his  answer  is  virtually  a  sober  indictment  of 
capitalism.  "The  fundamental  division  of  powers  in  the  United 
States,"  says  President  Hadley,  "is  between  voters  on  the  one 
hand  and  the  owners  of  property  on  the  other.  The  forces  of 
democracy  on  the  one  side  .  .  .  are  set  over  against  the  forces 
of  property  on  the  other  side.  .  .  .  Democracy  was  complete  as  far 
as  it  went,  but  constitutionally  it  was  bound  to  stop  short  at  social 
democracy."  It  is  against  this  condition  that  the  liberal  forces 
of  American  life  are  slowly  aligning  themselves.  A  law  that  is 
subservient  to  the  interests  of  the  status  quo  is  overwhelmingly  un- 
popular; the  use  of  the  injunction  in  labor  disputes,  for  example, 
has  actually  been  a  presidential  issue.  The  Clayton  Act,  with  all 
its  defects,  is  yet  a  wedge  that  organized  labor  can  one  day  use 
to  good  purpose.  Things  like  Mr.  Justice  Holmes'  dissent  in  Cop- 
page  V.  Kansas  deposit  a  solid  sentiment  of  determination  that  will 
not  easily  pass  away.  The  lawlessness  that  is  complained  of  in 
American  labor  is  essentially  the  insistence  that  the  life  of  the 
workers  has  outgrown  the  categories  in  which  traditional  authority 
would  have  confined  it.  The  basis  of  a  new  claim  of  rights  is  in 
America  autocthonous.  Nor  is  it  possible  to  doubt  that  only  con- 
cessions large  enough  to  amount  to  the  admission  of  its  substance  can 
prevent  it  from  being  made.  In  either  case,  we  have  the  materials 
for  a  vast  change  in  the  historic  outlines  of  American  federalism. 

It  is  thus  upon  the  fact  that  ours  is  an  age  of  vital  transition  that 
the  evidence  seems  clearly  to  concentrate.  The  two  characteristic 
notes  of  change  are  present  in  the  dissatisfaction  with  the  working 
of  law  on  the  one  hand,  and  the  reassertion  of  natural  rights  upon 
the  other.  The  validity  of  the  acts  of  the  legal  sovereign  every- 
where suffers  denial  unless  its  judgment  secures  a  widespread  ap- 
proval ;  or,  as  with  the  South  Wales  Mines  in  England  and  the  Rail- 
road Brotherhoods  in  the  United  States,  an  organized  attempt  may 
successfully  be  made  to  coerce  the  action  of  government  in  a  par- 
ticular direction.  Violence,  as  with  the  militant  suffragists  in  Eng- 
land, may  well  come  to  be  regarded  as  a  normal  weapon  of  political 
controversy;  nor  have  those  who  suffered  imprisonment  for  their 
acts  regarded  the  penalty  as  other  than  a  privilege.  In  such  an 
aspect,  the  sovereignty  of  the  state,  in  the  only  sense  in  which  that 
sovereignty  can  be  regarded  as  a  working  hypothesis,  no  longer  com- 
mands anything  more  than  a  partial  and  spasmodic  acceptance.  For 
it  is  clearly  understood  that  it  in  practice  means  governmental 
sovereignty;  and  the  need  for  the  limitation  of  governmental  powers 
is  perceived  by  men  of  every  shade  of  opinion.     Nor  is  the  reasser- 


THE  DIRECTION  OF  INDUSTRY  iiS 

tion  of  rights  less  significant.  It  involves  in  its  very  conception  a' 
limitation  upon  the  sovereignty  of  the  state.  It  insists  that  there 
are  certain  things  the  state  must  secure  and  maintain  for  all  its 
members,  and  a  state  than  can  not  secure  such  rights  as  are  deemed 
needful  by  a  minority  as  important,  for  example,  as  organized  labor, 
will  sooner  or  later  suffer  a  change  in  form  and  substance.  The 
basis  of  law  in  opinion  is  more  clear  than  at  any  previous  time;  and 
the  way  in  which  that  opinion  is  fostered  outside  the  categories  of 
the  normal  political  life  until  its  weight  is  great  enough  to  make 
heedless  resistance  impossible  is  a  fact  of  which  every  observer  must 
take  account. 

Digest  of  Report  of  Federal  Trade  Commission,  Part  I, 
on  Meat  Packing  Industries,  made  lyuhlic  July  11, 

1919* 

In  its  report  the  commission  says:  "A  fair  consideration  of  the 
course  the  five  packers  have  followed  and  the  position  they  have 
already  reached  must  lead  to  the  conclusion  that  they  threaten  the 
freedom  of  the  market  of  the  country's  food  industries  and  of  the 
by-product  industries  linked  therewith. 

"The  meat  packer  control  of  other  foods  will  not  require  long 
in  developing." 

Declaring  "the  history  of  the  packers'  growth  is  interwoven  with 
illegal  combinations,  rebates  and  with  undisclosed  control  of  cor- 
porations," the  report  also  urged  the  importance  of  full  publicity 
of  corporate  ownership  for  all  industries.  "As  to  devices  for 
secret  control,"  it  says,  "there  does  not  exist  adequate  law.  In  its 
absence  unfair  competition  may  run  its  course  to  the  goal  of  mo- 
nopoly and  accomplish  the  ruin  of  competitors  without  the  secret 
ownership  being  suspected  and  consequently  without  complaint  to 
the  Commission  or  investigation  of  facts.  The  competitor  is  in 
jeopardy  so  long  as  he  has  not  the  knowledge  of  true  ownership 
and  the  public  is  entitled  to  such  knowledge." 

Contending  that  the  Big  Five  packers  jointly  or  separately 
wield  controlling  interest  in  574  companies,  minority  interest  in  95 
others  and  undetermined  interest  in  93 — a  total  of  762  companies — 
and  that  they  produce  or  deal  in  some  775  commodities,  largely 
food  products,  the  report  has  the  following  to  say  regarding  the 
"growing  packer  invasion  into  related  and  unrelated  industries": 

*  Reprinted  by  permission  of  the  William  B.  Dana  Co.,  publishers  of 
the  Commercial  and  Financial  Chronicle.  This  Digest  was  made  from 
Vol.  109,  No.  2821    (p.  229,  7/19/19)- 


n6     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

"The  packer  has  drawn  to  a  marked  degree  upon  the  banks  of  the 
country  for  liquid  funds.  .  .  .  He  could  not  operate  on  the  scale  he 
does  without  the  very  large  loans  furnished  by  the  banks.  To  assure 
himself  loans  ample  to  his  purpose,  the  big  packer  has  secured 
affiliation  through  stock  ownership,  representation  on  directorates, 
?nd  in  other  ways,  with  numerous  banks  and  trust  companies." 

Mr.  Armour,  Mr.  Swift,  Mr.  Morris,  and  Mr.  Wilson  are  di- 
rectors in  banks  affiliated  closely  with  those  who  are  strong  at  the 
sources  of  credit  in  the  United  States.  Being  thus  allied  with  the 
powerful  interests  at  the  sources  of  credit,  the  packers'  power  is 
great,  not  only  for  financing  their  own  national  and  international 
operations,  but  for  affecting,  for  good  or  for  ill,  the  credit  of  cattle 
producers  and  of  competitors  or  customers  in  any  line. 

Following  the  presentation  of  details  bearing  on  the  alleged  in- 
terest of  the  packers  in  the  various  industries  referred  to  the  report 
says:  "The  reason  why  the  packers  are  seeking  control  of  the  sub- 
stitutes for  meat — the  foods  that  compete  with  meats — are  obvious. 
If  the  prices  of  substitutes  for  meats  are  once  brought  under  packer 
control,  the  consumer  will  have  little  to  gain  in  turning  to  them  for 
relief  from  excessive  meat  prices." 

Basil  Manly:  Labor's  Share  of  the  Social  Product^ 

The  capital  employed  in  the  steel  corporation,  represented  by  its 
stocks  and  bonds,  does  not  get  all  of  the  difference  between  labor 
cost  and  selling  price,  for  there  are  heavy  costs  for  transportation, 
and  materials  for  repairs  and  rebuilding  which  go  to  outsiders, 
although  it  may  be  remarked  parenthetically  that  the  same  interests 
which  control  the  steel  corporation  get  the  lion's  share  of  these 
"outside"  costs. 

The  group  that  is  principally  affected  by  the  contest  of  labor 
for  a  larger  share  of  the  product  are  the  common  stockholders. 
Information  regarding  the  actual  distribution  of  the  ownership  of  the 

common  stock  is  therefore  of  the  greatest  interest , 

it  must  be  remembered  that  the  steel  corporation  is  always 

cited  as  the  most  conspicuous  example  of  widely  distributed  stock. 
This  wide  distribution  as  a  matter  of  fact  arises  primarily  from  its 
policy  of  selling  stock  to  its  employees  on  easy  terms 

The  essential  facts  to  be  noted  are  that  the  holders  of  less  than 
twenty-five  shares  ($2500  par  value)  constituting  approximately  65 
per  cent  of  the  total  number  of  stockholders  actually  owned  only  4 

*  Reprinted  by  permission  of  the  American  Academy  of  Political  and 
Social  Science  (Annals,  Vol.  LXIX,  No.  158.  (Jan.,  1917).  The  Present 
Labor   Situation). 


THE  DIRECTION  OF  INDUSTRY  117 

per  cent  of  the  stock,  while  the  1,068  stockholders  (less  than  3  per 
cent)  with  more  than  1,000  shares  owned  70.6  per  cent  of  all  the 
stock.  Essentially  the  same  condition  exists  in  every  American  cor- 
poration. During  the  past  year  I  have  examined  nearly  300  stock- 
holders' lists  and  have  found  that  taking  them  all  together, — big 
companies  and  little  companies,  banks,  railroads  and  industrials — 
less  than  2  per  cent  of  the  stockholders  owning  r,ooo  shares  or  more 
hold  more  than  half  of  the  entire  stock. 

It  is  this  concentration  of  ow^nership  in  the  hands  of  a  small 
number  of  exceedingly  wealthy  people  that  will  sharpen  labor's 
determination  to  increase  its  share  of  the  product.  Regardless  of 
any  theoretical  conceptions  of  the  proper  distribution  of  wealth  the 
struggle  will  be  forced  at  least  until  this  class,  whose  wealth  is  not 
very  largely  hereditary,  has  been  shaken  out  of  its  position  of  con- 
trol. 

Final  Report  of  Committee  on  Commercial  and  Indus- 
trial Policy  after  the  War  (Great  Britain^  1918) 

The  attempts  made  in  certain  foreign  countries  and  British 
Dominions  to  establish  state  control  of  industrial  monopolies  of  any 
kind  have  been  along  two  lines,  directed  respectively  towards  (i) 
judicial  and  administrative  regulation  and  limitation,  and  (2)  the 
securing  of  publicity. 

The  most  conspicuous  example  of  efforts  at  the  prevention  or 
regulation  of  monopolist  combinations,  whatever  their  precise  form, 
is  furnished  by  the  anti-trust  legislation  of  the  United  States  of 
America,  and  it  cannot,  we  think,  be  argued  that  that  legislation 
has  so  far  met  with  any  very  substantial  measure  of  success.  The 
frequent  enactment  of  new  legislation  on  the  subject,  the  very 
prolonged  administrative  enquiries  and  judicial  hearings  in  im- 
portant cases,  the  difficulty  experienced  by  the  Federal  Government 
in  obtaining  judgments  in  its  favor  in  suits  instituted  by  it  against 
combines,  and  the  admitted  fact  that  the  formal  dissolution  of  com- 
binations, under  orcfer  of  the  courts,  has  only  led  to  the  establish- 
ment of  informal  and  secret  understandings  of  a  hardly  less  effective 
character,  all  suggest  in  our  opinion  that  it  would  be  inexpedient 
for  His  Majesty's  government  to  enter  upon  any  policy  aiming  at 
positive  control,  particularly  in  view  of  the  practical  difficulty  of 
defining  the  point  at  which  combination  can  be  regarded  as  con- 
trary to  public  interest. 

The  alternative  policy,  which  aims  at  assuring  the  fullest  pos- 
sible publicity  of  the  facts  as  to  the  existence  of  industrial  com- 
binations   has    been    adopted    in    Canada.  ...     In    the    United 


ii8     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

States  efforts  have  been  made  to  secure  publicity  by  the  establish- 
ment in  1903  of  the  Bureau  of  Corporations  "to  investigate  the 
organization  and  conduct  of  corporations  and  combinations,  etc., 
engaged  in  interstate  commerce  (except  common  carriers),  in  order 
to  give  information  to  the  President  and  to  enable  him  to  make 
recommendations  to  Congress."  In  19 14  a  Federal  Trade  Commis- 
sion was  established  with  {biter alia)  similar  powers  of  investigation, 
and  with  authority  to  require  companies,  etc.,  to  make  annual  and 
special  reports. 

We  think  that,  if  serious  efforts  are  to  be  made  by  British 
manufacturers  and  traders  to  organize  themselves  on  the  lines  recom- 
mended by  the  various  Trade  Committees,  which  we  have  set  out 
above,  it  is  desirable  that  some  means  should  be  devised  for  securing 
to  a  responsible  Government  Department  adequate  information  as 
to  any  combinations  so  formed,  and  that  provision  should  be  made 
for  State  investigation  in  special  cases. 

Herbert  Croly:  The  Promise  of  American  Life  * 
(pp.  351-2,  357-8,  367-8) 

Any  proposal  to  alter  the  responsibilities  and  powers  now  enjoyed 
by  the  central  and  state  governments  in  respect  to  tlie  control  oi 
corporations  and  the  distribution  of  wealth  involves,  of  course,  the 
Federal  rather  than  the  state  constitutions;  and  the  amendment 
of  the  former  is  both  a  more  difficult  and  a  more  dangerous  task  than 
is  the  amendment  of  the  latter.  A  nation  can  not  afford  to  ex- 
periment with  its  fundamental  law  as  it  may  and  must  experiment 
with  its  local  institutions.  As  a  m.atter  of  fact  the  Federal  Consti- 
tution is  very  much  less  in  need  of  amendment  than  are  those  of  the 
several  states.  It  is  on  the  whole  an  admirable  system  of  law 
and  an  efficient  organ  of  government;  and  in  most  respects  it  should 
be  left  to  the  ordinary  process  of  gradual  amendment  by  legal 
construction  until  the  American  people  have  advanced  much  farther 
towards  the  realization  of  a  national  democratic  policy.  Eventually 
certain  radical  amendm.ents  will  be  indispensable  to  the  fulfillment 
of  the  American  national  purpose;  but  except  in  one  respect  nothing 
of  any  essential  importance  is  to  be  gained  at  present  by  a  modifica- 
tion of  the  Federal  Constitution.  This  exception  is,  however,  of  th3 
utmost  importance.  For  another  generation  or  two  any  solution 
of  the  prolDlem  of  corporation  control,  and  of  all  the  other  critical 
problem.s  connected  therewith,  will  be  complicated,  confused,  and 
delayed  by  the  inter-state  commerce  clause,  and  by  the  impossibiUty, 

*  Copyright,  The  Macmillan  Compan3\     Reprinted  by  permission. 


THE  DIRECTION  OF  INDUSTRY  119 

under  that  clause,  of  the  exercise  of  any  really  effective  responsibility 
and  power  by  the  central  government.  The  distinction  between 
domestic  and  inter-state  commerce  which  is  implied  by  the  constitu- 
tional distribution  of  powers  is  a  distinction  of  insignificant  economic 
or  industrial  importance;  and  its  necessary  legal  enforcement  makes 
the  carrying  out  of  an  efficient  national  industrial  policy  almost 
impossible. 

Under  the  inter-state  commerce  clause,  a  corporation  conducting, 
as  all  large  companies  do,  both  a  state  and  an  inter-state  business,  is 
subject  to  several  supplementary  jurisdictions.  It  is  subject,  of 
course,  primarily  to  the  laws  of  the  state  under  which  it  is  organized, 
and  to  the  laws  of  the  same  state  regulating  its  own  particular  form 
of  industrial  operation.  It  is  subject,  also,  to  any  conditions  which 
the  legislatures  of  other  states  may  wish  to  impose  upon  its  business, 
— in  so  far  as  that  business  is  transacted  within  their  jurisdictions. 
Finally,  it  is  subject  to  any  regulation  which  the  central  government 
may  impose  upon  its  inter-state  transactions.  From  the  standpoint 
of  legal  supervision,  consequently,  the  affairs  of  such  a  corporation 
are  divided  into  a  series  of  compartments,  each  compartment  being 
determined  by  certain  arbitrary  geographical  lines— lines  which  do 
not  like  the  boundaries  of  a  municipality,  correspond  to  any  signif- 
icant economic  division.  As  long  as  such  a  method  of  supervision 
endures,  no  effective  regulation  of  commerce  or  industr}^  is  possible. 
A  corporation  is  not  a  commercial  Pooh-Bah,  divided  into  unrelated 
sections.  It  is  an  industrial  and  commercial  individual.  The  busi- 
ness which  it  transacts  in  one  state  is  vitally  related  to  the  business 
which  it  transacts  in  other  states,  and  even  in  those  rare  cases  of 
the  restriction  of  a  business  to  the  limits  of  a  single  state,  the  purchas- 
ing and  selling  made  in  its  interest  necessarily  compete  with  inter- 
state transactions  in  the  same  products.  Thus  the  Constitutional 
distinction  between  state  and  inter-state  commerce  is  irrelevant  to  the 
real  facts  of  American  industry  and  trade. 

In  the  past  the  large  corporations  have,  on  the  whole,  rather 
preferred  state  to  centralized  regulation,  because  of  the  necessary 
inefficiency  of  the  former.  .  .  . 

The  central  government  in  its  policy  toward  the  large  corporation 
must  adopt  one  of  two  courses.  Either  it  must  discriminate  in  their 
favor  or  it  must  discriminate  against  them.  The  third  alternative — 
that  of  being  what  is  called  "impartial" — has  no  real  existence;  and 
it  is  essential  that  the  illusory  nature  of  a  policy  of  impartiality 
should  in  the  beginning  be  clearly  understood. 

A  policy  of  impartiality  is  supposed  to  consist  in  recognizing 
the  existence  of  the  huge  industrial  and  railroad  organizations,  while 
at  the  same  time  forbidding  them  the  enjoyment  of  any  of  those  little 


120     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

devices  whereby  they  have  obtained  an  unfair  advantage  over  com- 
petitors. It  would  consist,  that  is,  of  a  pohcy  of  recognition  tem- 
pered by  regulation;  and  a  policy  of  this  kind  is  the  one  favored  by 
the  majority  of  conservative  and  fair-minded  reformers.  Such  a 
policy  has  unquestionably  a  great  deal  to  recommend  it  as  a  trans- 
itional means  of  dealing  with  the  problem  of  corporate  aggrand- 
izement, but  let  there  be  bo  mistake:  it  is  not  really  a  policy  of  strict 
neutrality  between  the  small  and  the  large  industrial  agent.  Any 
recognition  of  the  large  corporations,  any  successful  attempt  to  give 
them  a  legal  standing  as  authentic  as  their  economic  efficiency, 
amounts  substantially  to  a  discrimination  in  their  favor. 

The  whole  official  program  of  regulation  does  not  in  any  effective 
way  protect  their  competitors.  Unquestionably  these  large  corpora- 
tions have  in  the  past  thrived  partly  on  illegal  favors,  such  as 
rebates,  which  would  be  prevented  by  the  official  program  of  regu- 
lation; but  at  the  present  time  the  advantage  which  they  enjoy  over 
their  competitors  is  independent  of  such  practices.  It  depends  upon 
their  capture  and  occupation  of  certain  essential  strategic  positions 
in  the  economic  battle-field.  It  depends  upon  abundant  capital, 
which  enables  it  to  take  advantage  of  every  opportunity,  and  to 
buy  and  sell  to  the  best  advantage.  It  depends  upon  the  permanent 
appropriation  of  essential  supplies  of  raw  materials,  such  as  iron 
ore  and  coal,  or  of  terminals  in  large  cities  which  cannot  now  be 
duplicated.  It  depends  upon  possibilities  of  economic  industrial 
management  and  of  the  systematic  development  of  individual  indus- 
trial ability  and  experience  which  exist  to  a  peculiar  degree  in  large 
industrial  enterprises.  None  of  these  sources  of  economic  efficiency 
will  be  in  any  way  diminished  by  the  official  program  of  regulation. 
The  corporations  will  still  possess  substantially  all  of  their  existing 
advantages  over  their  competitors,  while  to  these  will  be  added  the 
additional  one  of  an  unimpeachable  legal  standing.  Like  the  life 
insurance  companies  after  the  process  of  purgation,  they  will  be 
able  largely  to  reduce  expenses  by  abolishing  their  departments  of 
doubtful  law.    .    .    . 

The  American  corporation  problem  will  never  be  understood  in 
its  proper  relations  and  full  consequences  until  it  is  conceived  as  a 
sort  of  an  advanced  attack  on  the  breastworks  of  our  national 
economic  system  by  this  essential  problem  of  the  distribution  of 
wealth.  The  current  experiments  in  the  direction  of  corporate  "regu- 
lation" are  prompted  by  a  curious  mixture  of  divergent  motives. 
They  endeavor  to  evade  a  fundamental  responsibility  by  meeting  a 
superficial  one.  They  endeavor  to  solve  the  corporation  problem 
merely  by  eradicating  abuses,  the  implication  being  that  as  soon 
as  the  abuses  are  supervised  out  of  existence,  the  old  harmony  be- 


THE  DIRECTION  OF  INDUSTRY  121 

tween  public  and  private  interest  in  the  American  economic  system 
will  be  restored,  and  no  more  "socialistic"  legislation  will  be  re- 
quired. But  the  extent  to  which  this  very  regulation  is  being  car- 
ried betrays  the  futility  of  the  expectation.  And  as  we  have  seen 
the  intention  of  the  industrial  reformers  is  to  introduce  public 
management  into  the  heart  of  the  American  industrial  system;  that 
is,  into  the  operation  of  railroads  and  public  service  corporations, 
and  in  this  way  to  bring  about  by  incessant  official  interference  that 
harmony  between  public  and  private  interest  which  must  be  the 
object  of  a  national  economic  system.  But  this  proposed  remedy 
is  simply  one  more  way  of  shirking  the  ultimate  problem;  and  it  is 
the  logical  consequence  of  the  persistent  misinterpretation  of  our 
unwholesome  economic  inequalities  as  the  result  merely  of  the  abuse, 
instead  of  the  legal  use,  of  the  opportunities  provided  by  the  exist- 
ing economic  system. 

An  economic  organization  framed  in  the  national  interest  would 
conform  to  the  same  principles  as  a  political  organization  framed 
in  the  national  interest.  It  would  stimulate  the  pecuHarly  efficient 
individual  by  offering  him  opportunities  for  work  commensurate 
with  his  abilities  and  training.  It  would  grant  him  these  opportun- 
ities under  conditions  which  would  tend  to  bring  about  their  re- 
sponsible use.  And  it  would  seek  to  make  the  results  promote  the 
general  economic  welfare.  The  peculiar  advantage  of  the  organiza- 
tion of  American  industry  which  has  gradually  been  wrought  during 
the  past  fifty  years  is  precisely  the  opportunity  which  it  has  offered 
to  men  of  exceptional  ability  to  perform  really  constructive  economic 
work.  The  public  interest  has  nothing  to  gain  from  the  mutilation 
or  the  destruction  of  these  nationalized  economic  institutions.  It 
should  seek,  on  the  contrary,  to  preserve  them,  just  in  so  far  as 
they  continue  to  remain  efficient;  but  it  should  at  the  same  time 
seek  the  better  distribution  of  the  fruits  of  this  efficiency.  The  great 
objection  to  the  type  of  regulation  constituted  by  the  New  York 
Public  Service  Commission  Law  is  that  it  tends  to  deprive  the 
peculiarly  capable  industrial  manager  of  any  sufficient  opportunity 
to  turn  his  abilities  and  experience  to  good  account.  It  places  him 
under  the  tutelage  of  public  officials,  responsible  to  a  public  opinion 
which  has  not  yet  been  sufficiently  nationalized  in  spirit  or  in  pur- 
pose, and  in  case  this  tutelage  fails  of  its  object  (as  it  assuredly 
will)  the  responsibility  for  the  failure  will  be  divided.  The  corpora- 
tion manager  will  blame  the  commissions  for  vexations,  blundering, 
and  disheartening .  interference.  The  commissions  will  blame  the 
corporation  manager  for  lack  of  cordial  cooperation.  The  result  will 
be  either  the  abandonment  of  the  experiment  or  the  substitution  of 
some  degree  of  public  ownership. 


122     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Louis  Brandeis:  Other  People's  Money  and  How  the 
Bankers  Use  It*  (pp.  4-6,  28-41) 

THE  DOMINANT  ELEMENT 

The  dominant  element  in  our  financial  oligarchy  is  the  investment 
banker.  Associated  banks,  trust  companies  and  life  insurance  com- 
panies are  his  tools.  Controlled  railroads,  public  service  and  indus- 
trial corporations  are  his  subjects.  Though  properly  but  middlemen, 
these  bankers  bestride  as  masters  America's  business  world,  so  that 
practically  no  large  enterprise  can  be  undertaken  successfully  with- 
out their  participation  or  approval.  These  bankers  are,  of  course, 
able  men  possessed  of  large  fortunes;  but  the  most  potent  factor  in 
their  control  of  business  is  not  the  possession  of  extraordinary 
ability  or  huge  wealth.  The  key  to  their  power  is  Combination — 
concentration  intensive  and  Comprehensive — advancing  on  three  dis- 
tinct lines: 

First:  There  is  the  obvious  consolidation  of  banks  and  trust 
companies;  the  less  obvious  affiliations— through  stockholdings,  vot- 
ing trusts  and  interlocking  directorates — of  banking  institutions 
which  are  not  legally  connected;  and  the  joint  transactions,  gentle- 
men's agreements,  and  "banking  ethics"  which  eliminate  competition 
among  the  investment  bankers. 

Second:  There  is  the  consolidation  of  railroads  into  huge  sys- 
tems, the  large  combinations  of  public  service  corporations  and  the 
formation  of  industrial  trusts,  which,  by  making  businesses  so  "big" 
that  local,  independent  banking  concerns  cannot  alone  supply  the 
necessary  funds,  has  created  dependence  upon  the  associated  New 
York  bankers. 

But  combination,  however  intensive,  along  these  lines  only, 
could  not  have  produced  the  INIoney  Trust — another  and  more  potent 
factor  of  combination  was  added. 

Third:  Investment  bankers,  like  J.  P.  Morgan  &  Co.,  dealers  in 
bonds,  stocks  and  notes,  encroached  upon  the  functions  of  the  three 
other  classes  of  corporations  with  which  their  business  brought  them 
into  contact.  They  became  the  directing  power  in  railroads,  public 
service  and  industrial  companies  through  which  our  great  business 
operations  are  conducted — the  makers  of  bonds  and  stocks.  They 
became  the  directing  power  in  the  life  insurance  companies,  and  other 
corporate  reservoirs  of  the  people's  savings — the  buyers  of  bonds 
and  stocks.  They  became  the  directing  power  also  in  banks  and 
*  Reprinted  by  permission  of  Frederick  A.  Stokes  &  Co.  Copyright, 
1914. 


THE  DIRECTION  OF  INDUSTRY  123 

trust  companies — the  depositaries  of  the  quick  capital  of  the  country 
— the  life  blood  of  business,  with  which  they  and  others  carried  on 
their  operations.  Thus  four  distinct  functions,  each  essential  to  busi- 
ness, and  each  exercised,  originally,  by  a  distinct  set  of  men,  became 
united  in  the  investment  banker.  It  is  to  this  union  of  business 
functions  that  the  existence  of  the  Money  Trust  is  mainly  due. 

The  development  of  our  financial  oligarchy  followed,  in  this  re- 
spect, lines  with  which  the  history  of  political  despotism  has  fa- 
miliarized us: — usurpation,  proceeding  by  gradual  encroachment 
rather  than  by  violent  acts;  subtle  and  often  long-concealed  concen- 
tration of  distinct  functions,  which  are  beneficent  when  separately 
administered,  and  dangerous  only  when  combined  in  the  same 
persons.  It  was  by  processes  such  as  these  that  Caesar  Augustus 
became  master  of  Rome.  The  makers  of  our  own  Constitution  had 
in  mind  like  dangers  to  our  political  liberty  when  they  provided  so 
carefully  for  the  separation  of  governmental  powers. 

HOW  THE  COMBINERS  COMBINE 

Among  the  allies,  two  New  York  banks — the  National  City  and 
the  First  National — stand  preeminent.  They  constitute,  with  the 
Morgan  firm,  the  inner  group  of  the  Money  Trust.  Each  of  the  two 
banks,  like  J.  P.  Morgan  &  Co.,  has  huge  resources.  Each  of  the 
two  banks,  like  the  firm  of  J.  P.  INIorgan  &  Co.,  has  been  dominated 
by  a  genius  in  combination.  In  the  National  City  it  is  James  Still- 
man;  in  the  First  National,  George  F.  Baker.  Each  of  these  gentle- 
men was  formerly  President,  and  is  now  Chairman  of  the  Board 
of  Directors.  The  resources  of  the  National  City  Bank  (including 
its  Siamese-twin  security  company)  are  about  $300,000,000;  those 
of  the  First  National  Bank  (including  its  Siamese-twin  security  com- 
pany) are  about  $200,000,000.  The  resources  of  the  Morgan  firm 
have  not  been  disclosed.  But  it  appears  that  they  have  available 
for  their  operations,  also,  huge  deposits  from  their  subjects;  deposits 
reported  as  $162,500,000. 

The  private  fortunes  of  the  chief  actors  in  the  combination  have 
not  been  ascertained.  But  sporadic  evidence  indicates  how  great 
are  the  possibilities  of  accumulation  when  one  has  the  use  of  "other 
people's  money."  Mr.  Morgan's  wealth  became  proverbial.  Of  Mr. 
Stillman's  many  investments,  only  one  was  specifically  referred  to, 
as  he  was  in  Europe  during  the  investigation,  and  did  not  testify. 
But  that  one  is  significant.  His  47,498  shares  in  the  National  City 
Bank  are  worth  about  $18,000,000.  Mr.  Jacob  H.  Schiff  aptly 
described  this  as  "a  very  nice  investment." 

Of  Mr.  Baker's  investments  we  know  more,  as  he  testified  on 


124     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

many  subjects.  His  20,000  shares  in  the  First  National  Bank  are 
worth  at  least  $20,000,000.  His  stocks  in  six  other  New  York 
banks  and  trust  companies  are  together  worth  about  $3,000,000. 
The  scale  of  his  investment  in  railroads  may  be  inferred  from  his 
former  holdings  in  the  Central  Railroad  of  New  Jersey.  He  was 
its  largest  stockholder — so  large  that  with  a  few  friends  he  held 
a  majority  of  the  $27,436,800  par  value  of  outstanding  stock,  which 
the  Reading  bought  at  $160  a  share.  He  is  a  director  in  28  other 
railroad  comipanies;  and  presumably  a  stockholder  in,  at  least,  as 
many.  The  full  extent  of  his  fortune  was  not  inquired  into,  for  that 
was  not  an  issue  in  the  investigation.  But  it  is  not  surprising  that 
Mr.  Baker  saw  little  need  of  new  laws.    When  asked: 

"You  think  everything  is  all  right  as  it  is  in  this  world,  do  you 
not?" 

He  answered: 

"Pretty  nearly." 

RAMIFICATIONS  OF   POV^ER 

f 

But  wealth  expressed  in  figures  gives  a  wholly  inadequate  picture 
of  the  allies'  power.  Their  wealth  is  dynamic.  It  is  wielded  by 
geniuses  in  combination.  It  finds  its  proper  expression  in  means  of 
control.  To  comprehend  the  power  of  the  allies  we  must  try  to 
visualize  the  ramifications  through  which  the  forces  operate. 

Mr.  Baker  is  a  director  in  22  corporations  having,  with  their 
many  subsidiaries,  aggregate  resources  or  capitalization  of  $7,272,- 
000,000.  But  the  direct  and  visible  power  of  the  First  National 
Bank,  which  Mr.  Baker  dominates,  extends  further.  The  Pujo  re- 
port shows  that  its  directors  (including  Mr.  Baker's  son)  are  directors 
in  at  least  27  other  corporations  with  resources  of  $4,270,000,000. 
That  is,  the  First  National  is  represented  in  49  corporations,  with 
aggregate  resources  or  capitalization  of  $11,542,000,000. 

It  may  help  to  an  appreciation  of  the  allies'  power  to  name  at 
few  of  the  more  prominent  corporations  in  which,  for  instance,  Mr. 
Baker's  influence  is  exerted — visibly  and  directly — as  voting  trustee,, 
executive  committee  man  or  simple  director. 

1.  Banks,  Trust,  and  Life  Insurance  Companies:  First  Na- 
tional Bank  of  N€w  York;  National  Bank  of  Commerce;  Farmers' 
Loan  and  Trust  Company;  Mutual  Life  Insurance  Company. 

2.  Railroad  Companies:  New  York  Central  Lines;  New  Haven, 
Reading,  Erie,  Lackawanna,  Lehigh  Valley,  Southern,  Northern  Pa- 
cific, Chicago,  Burlington  &  Quincy. 


THE  DIRECTION  OF  INDUSTRY  125 

3.  Public  Service  Corporations:  American  Telegraph  &  Tele- 
phone Company,  Adams  Express  Company. 

4.  Industrial  Corporations:  United  States  Steel  Corporation, 
Pullman  Company. 

Mr.  Stillman  is  a  director  in  only  7  corporations,  with  aggregate 
assets  of  $2,476,000,000;  but  the  directors  in  the  National  City 
Bank,  which  he  dominates,  are  directors  in  at  least  41  other  corpora- 
tions which,  with  their  subsidiaries,  have  an  aggregate  capitalization 
or  resources  of  $10,564,000,000.  The  members  of  the  firm  of  J.  P. 
Morgan  &  Co.,  the  acknowledged  leader  of  the  allied  forces,  hold  72 
directorships  in  47  of  the  largest  corporations  of  the  country. 

The  Pujo  Committee  finds  that  the  members  of  J.  P.  Morgan  & 
Co.  and  the  directors  of  their  controlled  trust  companies  and  of  the 
First  National  and  the  National  City  Bank  together  hold: 

"One  hundred  and  eighteen  directorships  in  34  banks  and  trust 
companies  having  total  resources  of  $2,679,000,000  and  total  deposits 
of  $1,983,000,000. 

"Thirty  directorships  in  10  insurance  companies  having  total 
assets  of  $2,293,000,000. 

"One  hundred  and  five  directorships  in  32  transportation  sys- 
tems having  a  total  capitalization  of  $11,784,000,000  and  a  total 
mileage  (excluding  lexpress  companies  and,  steamship  lines)  of 
150,200. 

"Sixty-three  directorships  in  24  producing  and  trading  corpora- 
tions having  a  total  capitalization  of  $3,339,000,000. 

"Twenty-five  directorships  in  12  public-utility  corporations  hav- 
ing a  total  capitalization  of  $2,150,000,000. 

"In  all,  341  directorships  in  112  corporations  having  aggregate 
resources  or  capitalization  of  $22,245,000,000." 

TWENTY-TWO  BILLION   DOLLARS 

"Twenty-two  billion  dollars  is  a  large  sum — so  large  that  we  have 
difficulty  in  grasping  its  significance.  The  mind  realizes  size  only 
through  comparisons.  With  what  can  we  compare  twenty-two 
billions  of  dollars?  Twenty-two  billions  of  dollars  is  more  than  three 
times  the  assessed  value  of  all  the  property,  real  and  personal,  in  all 
New  England.  It  is  nearly  three  times  the  assessed  value  of  all 
the  real  estate  in  the  City  of  New  York.  It  is  more  than  twice  the 
assessed  value  of  all  the  property  in  the  thirteen  Southern  states. 
It  is  more  than  the  assessed  value  of  all  the  property  in  the  twenty- 
two  states,  north  and  south,  lying  west  of  the  Mississippi  River. 

But  the  huge  sum  of  twenty-two  billion  dollars  is  not  large  enough 


126     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

to  include  all  the  corporations  to  which  the  "influence"  of  the  three 
allies,  directly  and  visibly,  extends,  for 

First:  There  are  56  other  corporations  (not  included  in  the  Pujo 
schedule)  each  with  capital  or  resources  of  over  $5,000,000,  and 
aggregating  nearly  $1,350,000,000,  in  which  the  Morgan  allies  are 
represented  according  to  the  directories  of  directors. 

Second:  The  Pujo  schedule  does  not  include  any  corporation 
with  resources  of  less  than  $5,000,000.  But  these  financial  giants 
have  shown  their  humility  by  becoming  directors  in  many  such.  For 
instance,  members  of  J.  P.  Morgan  &  Co.,  and  directors  in  the 
National  City  Bank  and  the  First  National  Bank  are  also  directors 
in  158  such  corporations.  Available  publications  disclose  the 
capitalization  of  only  38  of  these,  but  those  38  aggregate  $78,- 

669,375- 

Third:  The  Pujo  schedule  includes  only  the  corporations  in 
which  the  Morgan  associates  actually  appear  by  name  as  directors. 
It  does  not  include  those  in  which  they  are  represented  by  dummies, 
or  otherwise.  For  instance,  the  Morgan  influence  certainly  extends 
to  the  Kansas  City  Terminal  Railway  Company,  for  which  they 
have  marketed  since  1910  (in  connection  with  others)  four  issues 
aggregating  $41,761,000.  But  no  member  of  J.  P.  Morgan  &  Co., 
of  the  National  City  Bank,  or  of  the  First  National  Bank  appears 
on  the  Kansas  City  Terminal  directorate. 

Fourth:  The  Pujo  schedule  does  not  include  all  the  subsidiaries 
of  the  corporations  scheduled.  For  instance,  the  capitalization  of  the 
New  Haven  System  is  given  as  $385,000,000.  That  sum  represents 
the  bond  and  stock  capital  of  the  New  Haven  Railroad.  But  the 
New  Haven  System  comprises  many  controlled  corporations  whose 
capitalization  is  only  to  a  slight  extent  included  directly  or  indirectly 
in  the  New  Haven  Railroad  balance  sheet.  The  New  Haven,  like 
most  large  corporations,  is  a  holding  company  also;  and  a  holding 
company  may  control  subsidiaries  while  owning  but  a  small  part 
of  the  latter's  outstanding  securities.  Only  the  small  part  so  held 
will  be  represented  in  the  holding  company's  balance  sheet.  Thus, 
while  the  New  Haven  Railroad's  capitalization  is  only  $385,000,000 
— and  that  sum  only  appears  in  the  Pujo  schedule — the  capitalization 
of  the  New  Haven  System,  as  shown  by  a  chart  submitted  to  the 
Committee,  is  over  twice  as  great;  namely,  $849,000,000. 

It  is  clear,  therefore,  that  the  $22,000,000,000,  referred  to  by 
the  Pujo  Committee,  understates  the  extent  of  concentration  effected 
by  the  inner  group  of  the  Money  Trust. 


THE  DIRECTION  OF  INDUSTRY  127 


CEMENTING   THE    TRIPLE    ALLIANCE 

Care  was  taken  by  these  builders  of  imperial  power  that  their 
structure  should  be  enduring.  It  has  been  buttressed  on  every  side 
by  joint  ownerships  and  mutual  stock  holdings,  as  well  as  by  close 
personal  relationships;  for  directorships  are  ephemeral  and  may 
end  with  a  new  election.  Mr.  Morgan  and  his  partners  acquired 
one-sixth  of  the  stock  of  the  First  National  Bank,  and  made  a 
$6,000,000  investment  in  the  stock  of  the  National  City  Bank. 
Then  J.  P.  Morgan  &  Co.,  the  National  City,  and  the  First  National 
(or  their  dominant  officers — Mr.  Stillman  and  Mr.  Baker)  acquired 
together,  by  stock  purchases  and  voting  trusts,  control  of  the  Na- 
tional Bank  of  Commerce,  with  its  $190,000,000  of  resources;  of 
the  Chase  National,  with  $125,000,000;  of  the  Guaranty  Trust  Com- 
pany, with  $232,000,000;  of  the  Bankers'  Trust  Company,  with 
$205,000,000;  and  of  a  number  of  smaller,  but  important,  finan- 
cial institutions.  They  became  joint  voting  trustees  in  great  rail- 
road systems;  and  finally  (as  if  the  allies  were  united  into  a  single 
concern)  loyal  and  efficient  service  in  the  banks — like  that  rendered 
by  Mr.  Davison  and  Mr.  Lamont  in  the  First  National — was 
rewarded  by  promotion  to  membership  in  the  firm  of  J.  P.  Morgan 
&  Co. 

THE  PROVINCIAL  ALLIES 

Thus  equipped  and  bound  together,  J.  P.  Morgan  &  Co.,  the 
National  City  and  the  First  National  easily  dominated  America's 
financial  center.  New  York;  for  certain  other  important  bankers,  to 
be  hereafter  mentioned,  were  held  in  restraint  by  "gentlemen's" 
agreements.  The  three  allies  dominated  Philadelphia  too;  for  the 
firm  of  Drexel  &  Co.  is  J.  P.  Morgan  &  Co.  under  another  name. 
But  there  are  two  other  important  money  centers  in  America, 
Boston  and  Chicago, 

In  Boston  there  are  two  large  international  banking  houses — ^Lee, 
Higginson  &  Co.,  and  Kidder,  Peabody  &  Co. — both  long  established 
and  rich;  and  each  possessing  an  extensive  wealthy  clientele  of 
eager  investors  in  bonds  and  stocks.  Since  1907  each  of  these  firms 
has  purchased  or  underwritten  (principally  in  conjunction  with 
other  bankers)  about  100  different  security  issues  of  the  greater 
interstate  corporations,  the  issues  of  each  banker  amounting  in  the 
aggregate  to  over  $1,000,000,000.  Concentration  of  banking  capital 
has  proceeded  even  further  in  Boston  than  in  New  York.  By  suc- 
cessive consolidations  the  number  of  national  banks  has  been  reduced 


128     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

form  58  in  1898  to  19  in  1913.    There  are  in  Boston  now  also  23 
trust  companies. 

The  National  Shawmut  Bank,  the  First  National  Bank  of  Boston 
and  the  Old  Colony  Trust  Co.,  which  these  two  Boston  banking 
houses  and  their  associates  control,  alone  have  aggregate  resources 
of  $288,386,294,  constituting  about  one-half  of  the  banking 
resources  of  the  city.  These  great  banking  institutions, 
which  are  themselves  the  result  of  many  consolidations,  and 
the  2 1  other  banks  and  trust  companies,  in  which  their  directors  are 
also  directors,  hold  together  90  per  cent,  of  the  total  banking  re- 
sources of  Boston.  And  linked  to  them  by  interlocking  directorates 
are  9  other  banks  and  trust  companies  whose  aggregate  resources 
are  about  2^  per  cent,  of  Boston's  total.  Thus  of  42  banking 
institutions,  33,  with  aggregate  resources  of  $560,516,239,  holding 
about  92)2  per  cent,  of  the  aggregate  banking  resources  of  Boston, 
are  interlocked.  But  even  the  remaining  9  banks  and  trust  com- 
panies, which  together  hold  but  7^  per  cent,  of  Boston  banking 
resources,  are  not  all  independent  of  one  another.  Three  are  linked, 
together;  so  that  there  appear  to  be  only  six  banks  in  all  Boston  that 
are  free  from  interlocking  directorate  relations.  They  together  rep- 
resent but  5  per  cent,  of  Boston's  banking  resources.  And  it  may 
well  be  doubted  whether  all  of  even  those  6  are  entirely  free  from 
affiliation  with  the  other  groups. 

Boston's  banking  concentration  is  not  limited  to  the  legal  con- 
fines of  the  city.  Around  Boston  proper  are  over  thirty  suburbs, 
which  with  it  form  what  is  popularly  known  as  "Greater  Boston." 
These  suburban  municipalities,  and  also  other  important  cities  like 
Worcester  and  Springfield,  are,  in  many  respects,  within  Boston's 
"sphere  of  influence."  Boston's  inner  banking  group  has  inter- 
locked, not  only  33  of  the  42  banks  of  Boston  proper,  as  above 
shown,  but  has  linked  with  them,  by  interlocking  directorships,  at 
least  42  other  banks  and  trust  companies  in  35  other  municipalities. 

Once  Lee,  Higginson  &  Co.  and  Kidder,  Peabody  &  Co.  were 
active  competitors.  They  are  so  still  in  some  small,  or  purely  local 
matters;  but  both  are  devoted  cooperators  with  the  Morgan  as- 
sociates in  larger  and  interstate  transactions;  and  the  alliance  with 
these  great  Boston  banking  houses  has  been  cemented  by  mutual 
stockholdings  and  co-directorships.  Financial  concentration  seems 
to  have  found  its  highest  expression  in  Boston. 

Somewhat  similar  relations  exist  between  the  triple  alliance  and 
Chicago's  great  financial  institutions — its  First  National  Bank,  the 
Illinois  Trust  and  Savings  Bank,  and  the  Continental  &  Commercial 
National  Bank — which  together  control  resources  of  $561,000,000. 
And  similar  relations  would  doubtless  be  found  to  exist  wth  the  lead- 


THE  DIRECTION  OF  INDUSTRY  129 

ing  bankers  of  the  other  important  financial  centers  of  America,  as  to 
which  the  Pujo  Committee  was  prevented  by  lack  of  time  from  mak- 
ing investigation. 

THE   AUXILIARIES 

Such  are  the  primary,  such  the  secondary  powers  which  com- 
prise the  Money  Trust;  but  these  are  supplemented  by  forces  of 
magnitude. 

"Radiating  from  these  principal  groups,"  says  the  Pujo  Com- 
mittee, "and  closely  affiliated  with  them  are  smaller  but  important 
banking  houses,  such  as  Kissel,  Kinnicut  &  Co.,  White,  Weld  S»' 
Co.,  and  Harvey  Fisk  &  Sons,  who  receive  large  and  lucrative  patron- 
age from  the  dominating  groups,  and  are  used  by  the  latter  as 
jobbers  or  distributors  of  securities,  the  issuing  of  which  they  control, 
but  which  for  reasons  of  their  own  they  prefer  not  to  have  issued 
or  distributed  under  their  own  names,  Lee,  Higginson  &  Co.,  besides 
being  partners  with  the  inner  group,  are  also  frequently  utilized  in 
this  service  because  of  their  facilities  as  distributors  of  securities." 

For  instance,  J.  P.  Morgan  &  Co.  as  fiscal  agents  of  the  New 
Haven  Railroad  had  the  right  to  market  its  securities  and  that  of  its 
subsidiaries.  Among  the  numerous  New  Haven  subsidiaries  is 
the  New  York,  Westchester  and  Boston — the  road  which  cost 
$1,500,000  a  mile  to  build,  and  which  earned  a  deficit  last  year  of 
nearly  $1,500,000,  besides  failing  to  earn  any  return  upon  the  New 
Haven's  own  stock  and  bond  investment  of  $8,241,951.  When  the 
New  Haven  concluded  to  market  $17,200,000  of  these  bonds,  J.  P. 
Morgan  &  Co.,  "for  reasons  of  their  own,"  "preferred  not  to  have 
these  bonds  issued  or  distributed  under  their  own  name."  The 
Morgan  firm  took  the  bonds  at  92 ><  net;  and  the  bonds  were 
marketed  by  Kissel,  Kinnicut  &  Co.  and  others  at  96^4  • 


V.    THE  FUNDS  OF  REORGANIZATION" 


I.    THE  SURPLUS  PRODUCT 

J.  A.  Hohson:  Democracy  After  the  War  * 

For  the  controllers  of  capital  are  not  only  the  largest  recipients  of 
"surplus"  wealth,  but  they  are  the  personal  embodiment  of  what  is 
dangerous  and  wrong  in  the  economic  system,  considered  from  the 
standpoint  of  social  good.  So  long  as  the  actual  direction  of  in- 
dustry is  in  the  hands  of  men  who  are  motived,  not  by  the  desire  to 
get  goods  produced  and  distributed  in  ways  most  conducive  to  human 
welfare,  but  by  the  desire  for  personal  profit,  the  contradiction  be- 
tween the  human  meaning  of  industry  and  the  actual  play  of  eco- 
nomic forces  wall  persist.  In  every  department  of  economic  activity, 
agriculture,  manufacture,  mining,  transport,  commerce  and  finance, 
in  every  one  of  those  arts  and  professions  engaged  in  producing  non- 
material  wealth,  quantities  of  unearned  income  emerge,  representing 
the  superior  bargaining  power  of  some  landlord,  capitalist,  em- 
ployer, financier  or  other  professional  man,  derived  from  the  pos- 
session of  some  advantage  limiting  freedom  of  competition  and  con- 
veying some  power  to  enforce  terms  upon  buyers  and  sellers.  This 
intricate  and  all-pervasive  economic  force,  which  in  its  innumerable 
secret  ways  breeds  improperly,  is  a  direct  source  of  all  the  economic 
and  most  of  the  moral  evils  in  our  present  social  and  political  system. 
It  is  the  most  general  and  ubiquitous  abuse  of  power  and  the  central 
support  of  every  specific  abuse.  Not  only  is  it  responsible  for  the 
evil  contrasts  of  riches  and  poverty,  leisure  and  toil,  luxury  and 
want,  but  disease,  ignorance,  crime,  sexual  vice,  intemperance  and 
every  form  of  brutality  and  folly  are  nourished  in  the  bad  physical 
environment  which  improperly  provides. 

J.  A,  Hohson:  The  Industrial  System  (pp.  vii,  75-81, 

208-9)  * 

Where  industry  creates  a  product  larger  than  is  needed  for  these 
costs  of  maintenance,  the  surplus  is  not,  however,  distributed  by  any 
such  necessary  law.    It  is  taken  by  the  owners  oif  the  several  factors 

♦Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 

133 


134     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  production  in  accordance  with  the  economic  "pull"  they  are 
respectively  able  to  exercise.  The  strength  of  this  pull  varies  with 
the  degree  of  scarcity,  natural  or  contrived,  which  the  owners  of 
a  factor  are  able  to  secure  for  the  factor,  and  with  the  economic 
importance  attaching  to  this  scarcity.  A  "monopoly"  of  land,  where 
it  exists,  is  evidently  able  to  take  the  whole  of  any  surplus  beyond 
necessary  costs:  but  this  is  also  true  of  a  monopoly  of  any  other 
special  requisite  of  production  in  a  particular  industry.   .    .    . 

But  in  considering  the  economic  nature  and  functions  of  this 
surplus  a  distinction  of  prime  importance  arises  between  that  portion 
which,  though  not  requisite  to  sustain  the  current  rate  of  produc- 
tivity in  the  factor  that  receives  it,  operates  so  as  to  evoke  and  feed 
an  increased  or  an  improved  supply  of  productivity,  and  that  which 
exercises  no  such  power.  Such  "surplus,"  coming  as  a  rise  of  in- 
terest, profit,  or  wages,  causes  growth  in  the  industrial  structure 
by  bringing  into  productive  use  more  or  better  capital,  labor,  or 
ability.  This  may  be  classed  as  "productive  surplus."  So  far  as 
the  industrial  system  provides  for  the  due  application  of  this  portion 
of  the  surplus  to  promote  increased  productivity,  no  conflict  of  dis- 
tribution arises  and  no  waste.  But  where  scarcity  enables  a  factor 
to  extort  a  price  for  its  use  v>'hich  is  not  effective  for  stimulating  an 
increased  or  an  improved  supply,  such  surplus  is  unproductive.  "Un- 
productive surplus"  includes  the  whole  of  the  economic  rent  of  land, 
and  such  payments  made  to  capital,  ability  of  labor,  in  the  shape  of 
high  interest,  profits,  salaries,  or  wages  as  do  not  tend  to  evoke  a 
fuller  or  a  better  productivity  of  these  factors. 

This  unproductive  surplus  is  the  principal  source  not  merely  of 
waste  but  of  economic  malady.  For  it  represents  the  encroachment 
of  a  stronger  factor  upon  a  fund  which  is  needed,  partly  for  increasing 
the  efficiency  of  other  factors,  labor  in  particular,  partly  as  social 
income  to  be  expended  in  enlarging  and  improving  public  life.  This 
unproductive  surplus  moreover,  as  "unearned  income,"  acts  upon  its 
recipients  as  a  premium  on  idleness  and  inefficiency;  spent  capri- 
ciously on  luxuries,  it  imparts  irregularity  of  employment  to  the 
trades  which  furnish  these;  saved  excessively,  it  upsets  the  right 
balance  between  the  volume  of  production  and  consumption  in  the 
industrial  system. 

The  unproductive  surplus  therefor  represents  the  failure  of  the 
competitive  system  to  compete;  it  represents  the  powers  of  com- 
bination and  monopoly.  But  actual  study  of  the  forms  and  forces 
of  combination  in  the  various  branches  of  the  extractive  industries, 
manufacture,  transport,  commerce  and  finance,  shows  "free  com- 
petition" prevailing  over  a  very  limited  area  of  business  operations, 
while  everywhere  else  natural  or  artificial  combination  takes  forcible 


THE  FUNDS  OF  REORGANIZATION  135 

toll  at  some  point  or  other  in  the  stream  of  industry.  Instead, 
however,  of  imputing  this  abuse  of  economic  power  to  some  single 
class — the  land  owner,  the  entrepreneur,  the  capitalist — we  find 
this  surplus  composed  of  forced  gains  extracted  in  many  diverse 
ways  wherever  the  use  of  any  factor  of  production  is  bought  or 
sold.   .    .    . 

Following  then  the  distribution  of  the  industrial  product,  as  it  is 
achieved  by  the  breaking-up  of  prices  at  the  various  stages  of  pro- 
duction in  payment  for  the  uses  of  labor,  capital,  and  land  we  per- 
ceive that  definite  portions  are  allotted  for  the  maintenance  or  sub- 
sistence of  the  industrial  system,  and  for  the  enlargement  and  im- 
provement of  the  system  in  a  progressive  community.  So  far  as  the 
distribution  of  the  industrial  product  necessary  for  these  payments 
is  concerned,  we  recognize  a  close  coordination  of  the  three  factors 
of  production. 

A  maintenance  wage  or  wear-and-tear  fund  is  required  in  each 
case  alike.  So  likewise  an  increase  in  the  quantity  of  labor-power, 
capital-power,  land-power,  so  as  to  provide  for  the  growth  of  a 
business,  a  trade  or  the  industrial  system,  is  procured  by  a  rise  of 
price  per  unit  of  productive  power  which  acts  in  each  case. 

(a)  By  lowering  the  extensive  margin  of  employment,  and  so 
calling  into  economic  use  outside  agents  of  production. 

(b)  By  lowering  the  intensive  margin  of  employment,  and  so 
evoking  the  use  of  lower  grades  of  productive-power  in  the  factors 
already  employed. 

Quantitative  growth  of  industrial  structure  is  similarly  brought 
about  by  a  rise  of  price  per  unit  of  the  productive-power,  which 
brings  into  use  superiors  sorts  of  power  w^hich  it  did  not  pay  to 
substitute  for  the  existing  sorts  at  former  prices. 

In  the  case  of  each  factor  the  lowering  of  the  margin,  extensive 
or  intensive,  is  directly  due  to  a  rise  in  price  per  unit  of  the  pro- 
ductive power  that  factor  supplies;  similarly  a  fall  in  the  price  per 
unit  causes  a  rising  of  the  margin. 

This  is  the  way  in  which  the  industrial  system  works  and  grows. 
Each  one  of  these  payments  made  to  labor,  capital,  and  land  is  a 
strictly  necessary  cost  of  production.  These  laws  of  the  mainte- 
nance and  growth  of  the  industrial  system  are  recognized  to  be  anal- 
ogous in  their  nature  and  operation  to  those  relating  to  a  biological 
organism  which  provides  itself  with  food  to  repair  its  waste  of 
tissue  and  of  energy,  and  to  provide  for  its  growth.  In  neither  case 
is  the  method  of  maintenance  and  growth  purely  physical:  the  psy- 
chical factor  enters  into  both. 

As  the  craving  for  the  satisfaction  of  hunger  is  essential  to  evoke 
the  output  of  organic  energy  in  the  work  of  acquiring  food  for  the 


136     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

organism,  so  in  the  industrial  system,  the  felt  pressure  for  the 
demand  for  the  satisfaction  of  needs  constantly  operates  in  the  will 
of  social  groups,  evoking  fresh  output  of  cooperative  energy  in  the 
several  branches  of  industry.  Now  at  first  sight  it  does  not  seem 
inevitable  that  any  problem  of  distribution,  not  directly  and  even 
automatically  solvable,  should  arise.  If  the  result  of  the  working 
of  the  industrial  system  were  merely  to  produce  a  fund  of  food  and 
other  necessaries  just  sufficient  to  replace  the  wear  and  tear,  and  so  to 
maintain  intact  the  system,  no  problem  of  distributing  would  come 
up.  Capital  could  not,  even  if  it  would,  encroach  upon  the  mainte- 
nance wage,  nor  could  labor  deprive  capital  of  the  provision  for  re- 
placing worn-out  tools  and  material.  Improper  distribution  or  ex- 
cessive payment  to  any  factor  of  production,  is  not  possible,  at  any 
rate  for  long,  in  such  a  case. 

But  where,  as  is  usual,  the  industrial  system  turns  out  a  product 
larger  than  suffices  for  maintenance,  conflicts  of  interest  in  distribu- 
tion may  arise.  We  are  now  confronted  with  the  question  of  dis- 
posing of  a  surplus  over  and  above  the  requirements  for  mere  main- 
tenance. Such  "surplus,"  as  we  see,  may  be  regarded  in  the  first 
instance  as  a  natural  provision  for  organic  growth,  acting  in  the 
shape  of  minimum  stimuli  to  evoke  proportionate  increases  of  the 
various  sorts  of  labor,  capital,  and  land-powers,  for  the  enlargement 
of  the  industrial  system  and  its  output. 

The  industrial  system  produces  more  than  its  keep;  does  the 
whole  of  the  surplus  flow  along  certain  necessary  channels  for  the 
stimulation  of  industrial  growth?  It  may  appear  that,  whereas 
the  amount  required  for  maintenance  is  at  any  time  strictly  limited, 
progressive  efficiency  knows  no  such  limits.  There  is,  perhaps,  no 
assignable  limit  to  the  amount  of  goods  and  services  which  could  be 
consumed  in  such  ways  as  to  add  to  the  productive  efficiency  of 
mental  and  physical  workers  becoming  more  and  more  skillful,  in- 
telligent, informed  and  resourceful  and  to  evoke  the  increased 
quantity  of  saving  and  new  forms  of  capital  required  to  cooperate 
effectively  with  this  increased  and  improved  labor  power. 

That  the  whole  of  any  possible  increase  in  the  product  of  an 
industrial  system  is  capable  of  being  distributed  and  consumed,  so 
as  to  promote  the  increased  efficiency  of  the  industrial  system,  is  a 
reasonable,  if  not  an  incontrovertible  assumption. 

For  though  the  rate  at  which  a  rise  of  wages  or  of  profits  may 
be  assimilated  in  a  rising  standard  of  life,  so  as  to  promote  economic 
efficiency,  is  subject  to  certain  physical  and  moral  limitations  if  one 
regards  a  particular  trade  or  class  of  producers,  it  is  not  reasonable 
to  suppose  that  normally  the  progress  of  the  arts  of  industry  could 


THE  FUNDS  OF  REORGANIZATION  137 

exceed  the  pace  at  which  the  increased  product,  properly  distributed, 
would  serve  to  maintain  and  further  to  promote  efficiency. 

We  may  then,  accepting  provisionally  this  view  of  the  economy 
of  progress,  insist  that  every  "surplus"  can  theoretically  be  distrib- 
uted so  as  to  figure  as  a  necessary  cost  of  industrial  growth,  feeding 
the  industrial  organism.  There  is,  indeed,  in  every  progressive  com- 
munity a  successful  tendency  towards  such  a  natural  or  productive 
distribution  of  the  surplus. 

But  the  success  of  this  tendency  is  notoriously  qualified:  the  sur- 
plus is  not  so  distributed  as  to  produce  the  maximum  amount  of 
economic  progress.  Portions  of  the  "surplus"  which  might  have  gone 
as  stimuli  of  growth  are  taken  as  unnecessary  or  excessive  payments 
which,  instead  of  stimulating,  depress  activity,  and  so  the  rate  of 
growth  is  kept  unnecessarily  low.  For,  though  it  is  possible  and 
socially  desirable  that  the  whole  of  the  surplus  be  distributed  with 
the  same  natural  equity  that  determines  the  distribution  of  the 
maintenance  or  wear-and-tear  fund,  it  is  not  inevitable  that  this 
should  happen.  Nor  does  it  happen.  The  abuse  or  uneconomical 
use  of  the  surplus  product  is  the  source  of  every  sort  of  trouble 
or  malady  of  the  industrial  system,  and  the  whole  problem  of  in- 
dustrial reform  may  be  conceived  in  terms  of  a  truly  economical 
disposal  of  this  surplus. 

For  though  it  is  not  possible  for  the  owners  of  one  factor  of 
production  to  encroach  far  upon  the  subsistence  fund  of  any  of  the 
others,  or  for  the  owners  of  one  trade  or  province  of  industry  to 
rob  with  impunity  the  ov;ners  of  another  trade  or  province  of  its 
wear-and-tear  fund,  it  is  profitable  for  one  section  or  interest  or 
industry  to  effect  a  considerable  separate  gain  by  encroaching  upon 
the  portion  of  the  surplus  required  to  furnish  growth  to  some  other 
part  of  the  industrial  system.  There  exists  no  such  close  harmony 
in  the  system  as  shall  furnish  an  automatic  check  upon  such  depre- 
dations. An  industrial  system  may  still  survive  and  even  grow 
though  not  so  freely  or  so  rapidly,  if  a  landlord  class  claims  a  large 
piece  of  the  "surplus,"  the  payment  of  which  is  not  essential  to 
evoke  the  use  of  his  land,  or  if  a  class  of  capitalists  draw  an  interest 
or  a  profit  larger  than  is  sufficient  to  induce  the  application  of  their 
capital  or  ability,  or  if  some  favoured  and  protected  professions  or 
trades  take  salaries  or  wages  which  are  more  than  sufficient  to 
stimulate  any  improved  efficiency  they  give  out.  In  these  ways  "sur- 
plus" may  be  diverted  from  its  proper  work  of  furnishing  growing 
power  and  become  "unearned  income."  It  is  notorious  that  com" 
bination  is  primarily  directed  to  secure  some  such  element  of  super- 
fluous gain.  There  is  friction  and  antagonism  between  the  buyers 
and  the  sellers  of  land-power  (i.e.,  land  owners  and  tenants),  between 


138     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  buyers  and  sellers  of  labour-power  (i.e.,  employers  and  em- 
ployees), between  the  buyers  and  the  sellers  of  capital  (i.e.,  investors 
and  entrepreneurs),  while  the  conflicts  between  buyers  and  sellers 
of  various  goods  and  services  represent  the  struggle  of  trades  each 
seeking  to  get  a  larger  share  of  the  general  product  by  appreciating 
its  particular  product. 

So  far  as  the  wear-and-tear  or  maintenance  fund  is  concerned, 
no  real  problem  of  distribution  arises,  a  law  of  natural  harmony  of 
interests  among  the  owners  of  the  factors  of  production  determines 
the  distribution. 

So  far  as  labor  is  concerned,  a  "subsistence"  wage,  as  we  have 
seen,  does  not  necessaril}^  provide  a  full  hving  wage  for  workers  in 
a  trade  where  an  ample  margin  of  "unemployed"  or  cheap  immi- 
grants is  attainable.  But  within  these  limits  the  distribution  of  the 
portion  of  the  product  which  goes  for  wear  and  tear  involves  no 
conflict  of  real  interest  among  the  owners  of  the  several  factors. 

The  importance  of  this  harmony  is  often  underestimated:  it 
furnishes  a  genuine  and  substantial  basis  of  orderly  cooperation  over 
the  whole  industrial  field.  In  most  countries  and  at  most  times  the 
great  bulk  of  the  wealth  produced  is  normally  and  naturally  ap- 
portioned in  this  way  to  the  support  of  the  existing  industrial  fabric. 
Until  the  rise  of  modern  capitalist  industry  only  a  comparatively 
small  proportion  remained  over  as  a  surplus,  either  to  furnish  the 
means  of  industrial  progress,  or  to  pass  as  unearned  income  to  en- 
rich a  class  of  landlords,  usurers,  or  officials. 

The  increased  prevalence  and  intensity  of  the  conflicts,  not  only 
between  workers,  capitalists,  and  landlords,  but  between  trades 
and  groups  of  trades,  which  distribute  modern  industry,  are  pri- 
marily due  to  the  improvement  of  the  industrial  arts,  which  has 
enhanced  the  relative  importance  of  the  surplus. 

If  there  were  no  surplus  there  would  be  industrial  peace,  for 
necessary  payments  would  absorb  the  product.  If  there  were  a 
surplus,  the  whole  of  which  was  as  automatically  and  as  naturally 
apportioned  to  feed  the  growth  of  the  several  parts  of  the  industrial 
system  as  is  the  wear-and-tear  fund,  th'ere  would  still  be  peace.  But 
the  fact  that  this  surplus,  which  should  be  absorbed  in  stimuli  to 
progress,  m.ay,  instead,  be  forcibly  diverted  as  excessive  and  "un- 
earned" payment  by  the  owners  of  some  one  or  other  factor  of  pro- 
duction, breaks  this  natural  harmony  and  furnishes  a  ground  for 
class  or  trade  conflict. 

The  distinctive  character  of  this  doctrine  of  distribution  con- 
sists in  assigning  the  priority  of  significance  to  the  division  of  the 
product  into  costs  and  surplus  instead  of  into  wages,  interest,  and 
rent.    Not  until  the  surplus  has  been  separated  from  the  full  sub- 


THE  FUNDS  OF  REORGANIZATION  139 

sistence  fund  of  cost  does  any  real  problem  of  distribution  as  be- 
tween the  several  factors  arise.  Moreover,  so  far  as  the  normal 
working  of  industry  makes  stable  provision  for  allocating  some  of 
the  surplus  to  the  several  factors  as  stimuli  of  growth,  the  economy 
of  costs  may  be  extended  to  this  portion.  Both  the  subsistence  fund 
and  the  portion  of  the  surplus  thus  productively  applied  as  food 
for  industrial  growth  in  a  progressive  society  must  be  sharply  sep- 
arated from  the  unproductive  surplus  taken  as  economic  rent,  ex- 
cessive interest,  profits,  or  salaries,  which  furnishes  no  incentive  to 
industry  in  its  recipients. 

The  following  rough  figure  expresses  the  threefold  distinction, 
though  the  proportions  assigned  to  the  parts  are  purely  hypothetical: 

Unproductive  surplus  (unearned  increments)   C. 

Productive  surplus  (costs  of  growth)  B. 

Maintenance  (costs  of  subsistence)  A, 

A.  Maintenance  includes  (I)  minimum  wages  for  various  sorts 
of  labor  and  ability  necessary  to  support  and  evoke  their  continuous 
output  at  the  present  standard  of  efficiency;  (II)  Depreciation  or 
wear  and  tear  for  plant  and  other  fixed  capital;  (III)  Minimum 
interest  necessary  to  support  the  "saving"  involved  in  the  produc- 
tion and  maintenance  of  the  existing  fabric  of  capital;  (IV)  a  "wear- 
and-tear"  provision  for  land, 

B.  The  productive  surplus  includes  (I)  minimum  wage  of 
progressive  efficiency  in  quantity  and  quality  of  labor  and  ability 
of  various  grades;  (II)  such  rise  of  interest  above  the  subsistence 
rate  as  is  required  to  evoke  and  maintain  the  increase  of  saving 
required  for  industrial  progress. 

C.  The  unproductive  surplus  consists  of  (I)  economic  rent  of 
land  and  other  natural  resources;  (II)  all  interest  beyond  the  rate 
iavolved  in  A  and  B;  (III)  all  profit,  salaries,  or  other  payments 
for  ability  or  labor  in  excess  of  what  is  economically  necessary  to 
evoke  the  sufficient  use  of  such  factor  of  production. 

Modern  industry  tends  continually  to  increase  the  size  of  the 
surplus.  Part  of  it  settles  down  gradually  into  a  permanent  pro- 
vision for  industrial  growth,  in  accordance  with  the  law  we  have 
already  traced,  raising  the  price  for  use  of  labor  and  capital  above 
the  bare  subsistence  point.  A  great  deal,  however,  does  not  so  settle, 
but  forms  a  bone  of  contention.  No  law  for  its  apportionment  exists 
except  the  law  of  superior  force.  Landowners,  capitalists,  laborers, 
entrepreneurs,  or  combinations  of  these  owners  of  the  factors  of  pro- 
duction can,  if  they  are  strong  enough,  secure  as  unearned  and  ex- 
cessive gains  lumps  of  this  surplus.  Such  unearned  elements  of  in- 
come arise,  as  we  shall  recognize,  in  various  parts  of  the  industrial 
system.    Where  they  are  in  the  aggregate  a  relatively  small  share  of 


140      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  product,  they  cause  little  trouble.  But  when  they  form  a  large 
proportion  of  the  whole,  as  in  some  developed  industrial  countries, 
rtiey  not  only  cause  the  deep  conflicts  of  industrial  interests  between 
the  different  classes,  but  are  directly  responsible  for  those  great 
oscillations  of  industry  and  employment  which  involve  so  much 
waste  and  misery  in  our  social  system.  The  principal  problem  of 
modem  industrial  civilization  consists  in  devising  measures  to  secure 
that  the  whole  of  the  industrial  surplus  shall  be  economically  applied 
to  the  purposes  of  industrial  and  social  progress,  instead  of  passing  in 
the  shape  of  unearned  income  to  the  owners  of  the  factors  of  produc- 
tion whose  activities  are  depressed,  not  stimulated,  by  such  payments. 

How  far  the  most  economical  distribution  of  this  unproductive 
surplus  can  be  achieved  by  its  direct  partition  among  the  owners  of 
the  several  factors,  in  accordance  with  some  ascertained  rules  of 
equity  and  utility,  or  how  far  it  is  rightly  regarded  as  social  income 
to  be  taken  and  used  by  the  State  for  general  purposes  of  the  com- 
mon good,  is  a  question  which  must  await  later  consideration.    .    .    . 

If,  however,  we  admit  the  existence  of  a  large  and  varied  sur- 
plus widely  diffused  over  the  field  of  industry,  and  intelligible 
basis  is  given  to  the  labor  movement,  trade  unionism  will  rank 
as  an  organized  attempt  to  divert  rents,  excessive  interests  and 
profit,  and  other  "unearned"  income,  into  wages.  In  thus  inter- 
preting the  main  function  of  trade  unionism,  it  is  not  necessary  to 
assume  that  the  miners,  who  by  collective  power  of  bargaining,  ex- 
tort a  share  of  what  would  otherwise  be  surplus  mining  dividends, 
have  any  natural  or  inherent  right  to  this  surplus,  on  the  ground 
that  they  made  it,  or  that  they  need  it  more  than  other  workers. 
This  would  be  trade-individualism  based  on  a  defective  grasp  of  the 
organic  character  of  industry.  The  miners  have  no  special  claim  in 
nature  or  in  social  justice  upon  the  surplus  that  emerges  in  the  min- 
ing industry,  nor  have  the  cotton  spinners  upon  the  high  profits  of 
the  cotton  boon.  This  sectional  action  of  trade  unions  ranlis  as  a 
makeshift  method  of  redressing  the  balance  of  power  between  the 
factors  of  production  which  we  see  everywhere  struggling  each  to 
get  for  itself  as  much  as  possible  of  the  surplus  product.  In  certain 
industrial  conditions  the  land  owner,  in  others  the  capitalist,  is  the 
strongest,  and  takes  most  of  the  available  surplus  in  rent  or  high 
dividends;  normally  in  developed  industrial  nations  the  owners  of 
organizing  and  managing  ability  hold  the  balance  of  power.  The 
history  of  successful  trade  unions  in  such  trades  as  the  cotton,  iron, 
mining,  printing  trades  of  Great  Britain,  has  consisted  in  raids  upon 
surpluses  which  from  time  to  time  swell  up  in  these  trades,  followed 
by  prolonged  struggles  to  retain  the  whole  or  part  of  the  proceeds 
of  such  raids.  .    .    . 


THE  FUNDS  OF  REORGANIZATION 


141 


Reverting  to  our  earlier  analysis,  which  identified  the  surplus 
with  the  fund  of  economic  progress,  we  see  in  trade  unionism,  as 
in  the  larger  labor  movement  of  which  it  forms  a  part,  an  endeavor 
to  secure  a  better  and  more  fruitful  distribution  of  the  surplus  by 
getting  a  larger  share  for  labor  at  the  expense  of  the  other  factors. 
Industrial  progress  in  any  given  state  of  civilization  requires,  as  a 
first  charge  upon  the  surplus  product,  that  it  shall  be  so  used  as  to 
evoke  and  nourish  increased  and  improved  powers  in  the  several 
factors  of  production.  If  land  takes  too  much,  capital  and  labor  are 
both  starved  and  progress  is  correspondingly  retarded.  If  capital 
or  ability  takes  too  much,  and  labor  not  enough,  industrial  progress 
continues  to  lag,  for  the  healthy  march  of  industry  requires  a  pro- 
portionate advance  of  all  the  factors. 

If,  as  we  have  shown,  labor  is  normally  the  weakest  claimant 
for  the  surplus,  the  labor  movement  in  its  largest  aspects  must  be 
regarded  as  an  attempt  to  equalize  opportunities  among  the  factors, 
so  as  to  produce  a  more  socially  profitable  circulation  of  wealth. 

It  is  an  endeavor  on  the  part  of  workers  by  group  action  to 
obtain  for  themselves  as  individuals  an  increased  share  of  wealth 
and  leisure,  by  seizing  and  utilizing  such  portion  of  the  surplus  as 
emerges  in  their  trade  or  business.  Collective  bargaining  is  the  chief 
instrument  they  employ,  and  the  history  of  trade  unionism  has  been 
mainty  a  series  of  experiments  in  the  methods  of  using  it.  The 
general  result  of  these  experiments  has  been  to  show  that  modern 
organization  of  capital,  by  its  abler  direction  and  its  longer  purse,  is 
able  to  offer  successful  resistance  in  most  industrial  fields  to  the  more 
important  demands  of  labor.  This  discovery  has  driven  the  labor 
movement  into  politics,  workmen  seeking  to  use  legislative  instru- 
ments to  strengthen  their  power  of  bargaining. 

W.  I.  King:  Wealth  and  Income  of  the  People  of  the 
United  States^  (pp.  160,  165-6) 

TABLE  XXXI.— THE  ESTIMATED  PERCENTAGES  OF  THE  TOTAL  NATIONAL 
INCOME  RECEIVED  RESPECTIVELY  BY  LABOR,  CAPITAL.  LAND,  AND 
THE   ENTREPRENEUR 

SHARES   OF   PRODUCT 


Census  Year 


Wages 

and 

Interest 

Rent 

Profits 

Salaries 

35.8 

12. 5 

7.7 

44-0 

37 

2 

14.7 

8.8 

39-3 

48 

0 

12.9 

6.9 

31.6 

SI 

5 

18.6 

8.7 

21.3 

53 

5 

14.4 

7.6 

24.6 

47 

3 

15.0 

7.8 

30.0 

46 

9 

16.8 

8.8 

27-5 

Total 


1850 
i860 
1870 
1880 
1890 
1900 
1910 


100.  o 
100.0 

100. 0 

100. 1 
100. 1 
100. 1 
100.  o 


*  Copyright,  The  Macmillan  Company.     Reprinted  by  permission. 


142      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

In  19 1  o  the  wages  bill  of  the  nation  was  approximately 
$14,303,600,000.  It  is  possible  that  the  government  might  tax  away 
all  rent  and  turn  the  proceeds  to  the  benefit  of  labor.  Interest  can- 
not be  decreased  without  resulting  in  a  loss  of  saving;  hence,  the 
interest  bill  could  scarcely  be  lessened  without  destructive  effects 
to  the  capital  supply  of  the  country,  thus  ruining  our  industries. 
Nothing,  therefore,  could  be  gained  from  that  source.  Average 
profits  .  .  .  are  only  about  half  as  large  again  as  average 
wages.  We  could  not  get  the  services  of  entrepreneurs  for  nothing 
and  it  must  be  conceded  that  the  farmers  and  planters  and  business 
men,  as  a  rule,  rank  higher  in  efficiency  than  does  the  average  em- 
ployee; therefore,  these  entrepreneurs  must  necessarily  be  paid 
somewhat  more  than  the  average  wage  of  the  latter.  Suppose  that, 
as  the  maximum  possible  allowance,  we  took  one-fourth  of  all  profits 
and  diverted  those  also  to  the  benefit  of  the  employees.  The  total 
allowance  for  wages  and  salaries  would  now  amount  to  abour 
$19,079,500,000,  or  a  gain  of  almost  exactly  one-third  over  and  above 
the  present  payments  for  labor.    .    .    . 

It  would  seem  improbable  that,  with  our  present  national  pro- 
ductive power,  any  feasible  system  of  distribution  could  increase  thj 
average  wage  earner's  income  in  purchasing  power  by  more  than 
one-fourth  and  this  is  an  extreme  rather  than  a  moderate  estimate. 
While  such  a  change  might  or  might  not  be  desirable,  it  would,  at 
least,  work  no  startling  revolution  in  the  condition  of  the  employees 
of  the  United  States.  The  grim  fact  remains  that  the  quantity  of 
goods  turned  out  absolutely  limits  the  income  of  labor  and  that  no 
reform  will  bring  universal  prosperity  which  is  not  based  fundamen- 
tally upon  increasing  the  national  income.  After  all,  the  Classical 
Economists  were  right  in  emphasizing  the  side  of  production  in 
contradistinction  to  that  of  distribution.  Nature  refuses  to  yield  her 
bounty  except  in  return  for  effort  expended.  Demands  for  higher 
wages  have  never  yet  unlocked  her  storehouses. 

Walter  E.  Weyl:  The  New  Democracy  * 
(pp.  191-207). 

It  is  the  increasing  wealth  of  America,  not  the  growing  poverty  of 
any  class,  upon  which  the  hope  of  a  full  democracy  must  be  based. 
It  is  this  wealth  which  makes  democracy  possible  and  solvent,  for 
democracy,  like  civilization,  costs  money.  Finally  it  is  this  social 
surplus,  our  clear  gain  in  wealth  after  the  year's  business  is  over, 
our  excess  of  social  product  over  social  effort,  which  renders  igno- 
rance, poverty,  and  minority  rule  anachronistic,  and  gives  to  our 
democratic  strivings  a  moral  impulse  and  a  moral  sanction. 
*  Copyright,  The  JMacmillan  Company.    Reprinted  by  permission. 


THE  FUNDS  OF  REORGANIZATION  143 

The  surplus  of  society,  which  thus  overrides  all  our  traditions 
and  shapes  all  our  philosophies,  is  a  phenomenon  of  transcendent 
importance.  It  is  a  new  factor  in  man's  career.  During  all  history, 
prior  to  the  last  few  centuries,  poverty,  pain,  and  deficit  ruled  the 
world.  Back  of  every  society,  simple  or  complex,  lay  the  fateful 
force  of  human  fecundity.  The  increasing  population  pressed  upon 
the  means  of  subsistence.  The  babe  pushed  his  parents  into  the 
grave.  For  every  man  killed  by  disease,  famine,  war,  overwork, 
a  child  was  born 

During  all  those  thousands  of  years  while  empires  rose  and  fell 
and  rose  and  fell  again,  the  masses  of  the  people  remained  abject. 
A  servile  revolt  was  but  a  demand  for  straw  with  which  to  make 
bricks,  for  a  little  more  food,  for  an  abrogation,  not  of  evils,  but  of 
unaccustomed  evils.  These  revolts  were  futile.  Even  though  for  a 
moment  the  hand  of  the  exploiter  relaxed,  inevitably  the  people 
sank  to  their  former  evil  state.  Religion,  philosophy,  superstition, 
folk-lore,  the  sword,  lash,  wheel,  gibbet,  torture  chamber, — all  these 
but  reenforced  a  submission  which  social  poverty  imposed.    .    .    . 

The  fundamental  belief  in  the  ultimate  success  of  the  people 
rests  in  final  analysis  upon  the  success  hitherto  attained.  The  eco- 
nomic determinism  which  makes  laws,  ethics,  political  institutions, 
and  social  theories  largely  the  reflex  of  changing  economic  condi- 
tions seems  itself  to  be  a  reflex  of  the  past  success  of  the  mass  in 
securing  a  larger  share  of  the  surplus.  Since  the  masses  have  grown 
in  wealth,  they  have  become  confident  of  ultimate  victory.  The  best 
augury  of  the  coming  democracy  is  its  first  fruits. 

To  America  this  social  surplus  promises  more  than  to  other 
nations.  Never  in  history  has  there  been  a  social  surplus  equal  to 
that  of  America  to-day,  or  at  all  comparable  with  the  surplus  which 
the  still  undeveloped  resources  of  the  scarred  continent  are  to  bring 
forth.  Of  all  the  children  of  the  Industrial  Revolution,  America — 
one  of  the  youngest — is  the  most  favored. 

This  incomparable  wealth  present,  and  above  all  prospective, 
gives  to  the  democratic  movement  in  this  country  a  tone  different 
from  that  of  England,  Germany,  France,  or  Belgium.  It  makes  our 
past  blunders  seem  mere  youthful  pranks.  It  makes  us  preeminent- 
ly the  heirs  of  science  and  invention.  Science,  more  mobile  even 
than  money,  goes  where  money  is;  and  America,  because  her  wealth 
is  greater,  profits  in  greater  measure  than  other  nations  from  the 
inventions  of  those  nations. 

It  is  our  future  wealth,  due  to  the  fact  that  we  still  occupy  a 
continent,  preempted  but  still  fertile,  that  enlarges  our  hopes. 
Under  a  perfect  system  of  production  and  distribution,  the  average 
Italian  would  not  be  so  well  off  as  is  to-day  the  average  American 


144     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

under  our  most  imperfect  system.  The  bitterness  of  group  struggles 
in  Belgium,  Italy,  Austria,  is  born  of  their  relative  poverty.  In  those 
lands  intelligence  and  energy  constantly  push  forward  their  fron- 
tiers— but,  at  best,  they  are  not  continents. 

There  are  exalted  and  impatient  souls  who  pay  no  heed  to  tales 
of  mere  material  progress.  They  believe  that  the  geniuses — the 
Shakespeares,  Beethovens,  Botticellis,  Kants,  Darwins — do  not  rise 
in  the  pork-and-pig-iron-producing  nations;  that  a  full  belly  means 
an  empty  mind;  and  that  they  who  wax  fat  kick  against  the  Lord. 
They  are  willing,  with  Renan,  to  give  up  America  and  all  her  future 
for  medieval  Florence;  and,  like  Carlyle,  they  have  no  patience 
v/ith  a  boundless  land,  which  produces  only  dollars  and  bores.  In 
the  eyes  of  such  men  America's  wealth  is  her  weakness. 

Nevertheless  a  palpable  nexus  exists  between  a  modicum  of  na- 
tional wealth  and  the  elements  of  democracy  and  civilization.  In- 
tellectual and  moral  progress  cost  money  as  do  steam  engines  and 
dreadnaughts.  Money — though  only  a  part — is  necessary  for  edu- 
cation, sanitation,  leisure,  and  the- amenities  of  life;  for  schools,  uni- 
versities, libraries,  research  institutes,  art  galleries,  hospitals,  mu- 
seums, theaters,  conservatories,  magazines,  books,  parks,  improved 
houses,  better  factories,  clothing,  shelter,  recreation,  and  the  endow- 
ment and  production  of  what  is  good  and  worth  while.  Eight  hun- 
dred million  dollars  intelligently  spent  on  education  is  better  than 
four  hundred  millions.  The  growth  of  two  bales  of  cotton,  or  two 
bushels  of  wheat,  where  one  grew  before,  may  make  the  difference 
between  a  besotted,  superstitious  and  reactionary  people  and  an  in- 
telligent, cultured,  and  progressive  people.  Until  the  material  prob- 
lems which  beset  mankind  are  solved;  until  misery,  disease,  crime, 
insanity,  drunkenness,  degeneration,  ignorance  and  greed — which 
are  the  offspring  (as  also  the  parents)  of  poverty — are  removed  (and 
their  removal  costs  money),  humanity  will  not  be  able  to  essay  the 
problems  of  mind  and  of  social  intercourse.  Our  chance  in  America 
of  an  eventual  civilization  rising  above  the  demand  for  daily  bread 
and  more  money  depends  upon  our  wise  utilization  of  our  national 
resources  and  our  national  earnings.  However  spiritual  a  structure 
civilization  is,  it  is  nevertheless  built  upon  wheat,  pork,  steel,  money, 
wealth. 

Our  wealth  is  already  so  gigantic  as  to  be  alm^ost  incomprehen- 
sible. A  billion  dollars  exceeds  the  fortune  of  any  individual  since 
the  world  began.  It  is  like  a  "light  year"  or  some  other  convenient 
but  unimaginable  astronomical  term.  Yet  in  1904  our  national 
wealth  was  estimated  by  the  census  authorities  at  107  of  these  bil- 
lions of  dollars.  The  present  estimated  wealth  of  New  York  State 
is  twice  the  entire  estimated  wealth  of  the  United  States  in  1850. 


THE  FUNDS  OF  REORGANIZATION  145 

We  would  sell  under  the  hammer  for  fifteen  times  as  much  as  we 
would  have  done  a  little  over  half  a  century  ago. 

The  wealth  of  America,  moreover,  is  not  a  secret  hoard  to  which 
new  billions  are  brought  and  added.  It  is  a  living  thing,  which  grows 
at  a  stupendous  rate  as  new  millions  of  men  pour  into  the  land,  and 
new  machines,  new  scientific  processes,  new  methods  of  organiza- 
tion, lay  the  continent  wider  open.  From  1879  to  1900  our  wealth 
increased  at  the  rate  of  almost  two  billions  a  year;  from  1900  to 
1904  it  recorded  an  apparent  increase  of  alm^ost  five  billions  a  year. 
During  every  eighteen  months  of  those  four  years  there  was  added 
to  our  possessions  an  increment  greater  than  the  whole  estimated 
wealth  of  the  country  in  1850. 

Ever^^vhere  are  signs  of  a  stupendous  productiveness.  The  num- 
ber of  our  horses,  sheep,  mules,  swine  increases;  our  production  of 
wheat,  corn,  cotton,  rice,  has  enormously  grown.  So  also  our  mineral 
production.  In  1840  we  produced  less  than  two  million  long  tons  of 
coal;  in  1909  we  produced  four  hundred  and  eleven  millions.  Tha 
mere  increase  in  coal  production  in  1907  over  that  of  the  preceding 
year  was  about  equal  to  the  entire  output  of  all  the  country's  mines 
during  the  eighty-five  years  from  the  Declaration  of  Independence 
to  the  outbreak  of  the  Civil  War. 

In  1870  we  produced  three  million  long  tons  of  iron  ore;  in  1909, 
fifty-one  millions.  Our  pig-iron  production,  which  never  amounted 
to  a  million  long  tons  before  1864,  increased  to  almost  twenty-seven 
millions  in  19 10.  The  production  of  steel,  which  remained  below 
one  million  tons  until  1880,  rose  to  twenty-four  millions  in  1909. 
Enormously  rapid  also  has  been  the  increase  in  our  output  of  gold, 
aluminium,  cement,  copper,  lead,  salt,  stone,  and  zinc;  while  our 
production  of  petroleum,  which  averaged  about  a  hundred  million 
gallons  a  year  during  the  Civil  War,  rose  in  1909  to  over  seven  and 
one  half  billions  of  gallons. 

Our  American  agriculture  has  not  only  fed  our  growing  popula- 
tion, but  it  still  permits  vast  exportations  of  grain,  flour,  and  meat 
products.  Moreover  it  has  been  carried  on  by  a  steadily  lessening 
proportion  of  the  capital  and  labor  of  the  country.  There  has  Keen 
simultaneously  an  almost  bewildering  increase  in  our  manufacturing 
industries. 

When  we  try  to  visualize  the  statistics  of  our  American  railroads, 
the  mind  sinks  exhausted  under  the  effort.  The  traffic  increases  in- 
cessantly and  enormousl3^  While  our  population  has  not  quite 
doubled  in  thirty-three  years,  our  railroad  passenger  and  freight 
traffics  have  more  than  doubled  in  nine  years.  In  1909  our  railroad 
freight  mileage  was  equivalent  to  the  work  of  our  ninety-two  millions 
of  inhabitants  carrying  each  a  load  of  over  four  hundred  pounds  a 


146     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

distance  of  over  thirty  miles  each  day.  This  enormous  traffic,  like 
the  tremendously  increasing  water  carriage  on  the  Great  Lakes,  re- 
veals the  actual  and  potential  pov/er  of  the  machine-aided  American 
nation. 

It  is  figures  like  these,  almost  inconceivable  in  their  totals,  which 
give  to  Americans  their  abiding  sense  in  the  infinite  potentialities  of 
the  continent.  From  the  beginning  the  continent  poured  forth  new 
millions,  and  later  new  billions,  of  wealth.  An  invention  which 
netted  the  discoverer  a  few  thousands  or  hundreds  of  thousands 
brought  to  the  nation  hundreds  of  millions  of  dollars.  Better 
methods,  improved  machinery,  a  more  scientific  and  effective  or- 
ganization of  industry,  combined  to  increase  our  stupendous  pro- 
ductiveness. Our  national  resources  were  enormously  increased  by 
discoveries  of  new  foods,  by  new  uses  to  which  the  land  might  be 
put. 

So  much  for  the  wonders  of  the  past.  But  they  are  wonders 
only  so  long  as  we  think  solely  in  the  terms  of  the  past.  Actually  our 
utilization  of  the  continent  has  hardly  begun.  It  has  hardly  begun 
to  begin.    .    .    . 

A  great  social  surplus,  hov/ever,  does  not  mean  that  a  democracy 
is  attained,  but  only  that  it  is  attainable.  Without  social  wealth, 
a  real  democracy  is  not  possible;  with  it,  it  is  not  inevitable. 

The  masses  of  the  people,  if  they  are  to  secure  a  democracy, 
must  not  fall  or  remain  below  the  three  levels  of  democratic  striving. 
Below  the  economic  level  of  democratic  striving,  men  are  for  the 
most  part  too  ill-fed,  ill-clad,  ill-conditioned,  too  depressed  by  want 
or  sickness,  too  harassed  by  debt  or  insecurity,  too  brutalized  by 
child  labor  or  overwork,  or  too  demoralized  by  recurring  unemploy- 
m.ent  to  maintain  the  morale  required  for  the  attainment  of  democ- 
racy. Below  the  intellectual  level  of  democratic  striving,  most  men 
are  too  credulous,  too  suspicious,  too  immersed  in  petty  preoccupa- 
tions, too  narrow-viewed  to  perceive  their  individual  interest  in  the 
wider  interest  or  group  or  nation  and  they  are  too  near  minded  to 
value  the  larger  social  gain  of  the  future  above  the  smaller  social  or 
personal  gain  of  the  moment.  Below  the  political  level  of  democratic 
striving,  men  are  too  unused  to  political  weapons,  or  too  removed 
from  them,  to  be  able  effectively  to  translate  their  economic  and  in- 
tellectual powers  into  political  facts.  To  achieve  a  real  popular 
sovereignty,  the  masses  of  the  people  must  rise  or  remain  above  all 
of  these  levels.  ...  It  is  the  social  surplus  which  permits  the 
economic  advance  of  the  people,  which  in  turn  facilitates  their 
intellectual  enfranchisement,  which  in  turn  tends  strongly  in  the 
direction  of  political  representation. 


THE  FUNDS  OF  REORGANIZATION  147 

Walter  E.  We^jl:  The  End  of  the  War''  (p.  305) 

More  important,  however,  even  than  the  question  of  our  eco- 
nomic efficiency  is  that  of  regulating  the  flow  of  profits  both  within 
the  nation  and  outward  to  foreign  countries.  If  we  permit  an 
enormous  accumulation  of  wealth  and  of  profits  to  be  deflected,  as 
in  the  past  to  a  few  small  groups,  we  shall  find  that  these  groups, 
in  control  of  billions  of  dollars  will  force  the  country  to  undertake 
imperialistic  projects.  Our  financiers  will  discover  that  there  is  a 
much  greater  profit  in  foreign  than  in  home  investmer/s.  The  rise 
in  our  wages,  the  slackening  of  our  immigration  and  the  general 
movement  toward  a  betterment  of  working  conditions  tend  generally 
to  reduce  the  rate  of  returns  upon  new  home  ventures,  and  therefore 
increase  the  tendency  toward  a  forced  export  of  capital,  irrespective 
of  the  political  consequences  of  such  export.  We  are  approaching  a 
stage  in  our  economic  evolution  similar  to  that  which  England 
reached  some  sixty  years  ago.  And  the  impulse  with  us  is  likely 
to  be  equally  strong  and  even  more  dangerous,  for  in  the  early  days 
England  stood  alone  as  the  purveyor  of  capital,  whereas  we  enter 
the  imperialistic  competition  at  a  time  when  many  nations  strive 
desperately  for  their  shares  of  the  profits. 

It  would  not,  of  course,  be  wise,  even  were  it  possible  to  prohibit 
the  export  of  capital.  It  is  eminently  proper  that  a  certain  portion 
of  the  surplus  income  of  America  and  of  Western  Europe  should  go 
to  backward  countries  where  capital  is  more  necessary.  It  should 
be  the  endeavor  of  the  great  industrial  nations,  however,  to  regulate 
this  outflow  and  seek  to  convert  the  present  imperialistic  scramble 
into  an  international  imperialism,  in  which  all  investment  in  back- 
ward countries  would  be  made  on  joint  international  account  and 
under  joint  management,  with  full  consideration  given  to  the  needs, 
both  economic  and  political,  of  the  indigenous  races.  Though  we 
must  export  a  certain  portion  of  our  surplus  capital,  it  will  be  dis- 
astrous if  the  expulsive  force  of  our  economic  system  should  be  so 
great  as  to  cause  an  exaggeration  of  this  tendency,  an  increase  in 
its  violence,  and  an  enhanced  liability  to  drive  us  into  war.   .    .    . 

.  .  .  We  should  act  upon  the  principle  that  large  quantities  of 
capital  should  not  be  exported  until  we  can  properly  feed,  clothe, 
and  house  all  our  citizens,  and  can  give  them  education,  recreation, 
and  all  other  essentials  of  a  full  and  healthful  life.  In  other  words, 
we  should  take  from  the  small  ruling  groups  the  control  which  they 
now  possess  over  our  national  revenue.  Without  destroying  all 
private  property  and  incentive  to  gain,  without  undermining  individ- 
*  Copyright,  The  Macmillan  Company.     Reprinted  by  permission. 


148     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ual  initiate  but  by  canalizing  it,  we  should  conduct  our  national 
business  as  though  all  this  wealth  belonged  to  the  nation  as  a 
whole,  as  though  all  income  were  primarily  for  the  common  benefit. 
In  other  words,  we  should  move  toward  an  industrial  and  social 
democracy. 


2.    THE  SOCIAL  MINIMUM 

Alvin  Johnson:  To  So,ve  Capitalism  * 

It  is  not  enough  to  restore  Europe  to  its  pre-war  condition.  That 
was  a  condition  of  widespread  industrial  unrest.  The  workers  of 
Germany  were  so  dangerously  discontented  that  many  employers 
welcomed  the  war,  thinking  that  it  would  postpone  the  troubles 
at  home.  In  Italy  and  France  radicalism  was  growing  prodigiously, 
and  England  was  at  the  brink  of  a  terrific  industrial  conflict.  Cap- 
italism in  its  pre-war  phase  was  living  beyond  its  means.  Mr.  Van- 
derlip  says  that,  "English  industry  made  a  red  ink  overdraft  on  the 
future  by  underpaying  labor  so  that  it  did  not  receive  enough  to 
live  efficiently."  But  if  the  British  industrial  population  is  decaying 
under  capitalistic  exploitation,  that  is  even  more  decidedly  the  case 
with  the  industrial  populations  of  the  Continent  where  wages  are 
lower  and  the  hours  of  labor  longer.  It  may  be  urged  that  wages 
are  nowhere  so  low  as  they  were  a  half  century  earlier,  when  there 
was  little  unrest.  That  is  beside  the  point.  Wages  are  inadequate 
to  maintain  efficiently  the  kind  of  laborer  we  require  to-day. 

How  this  deep  seated  evil  of  labor  exploitation  is  to  be  remedied 
Mr.  Vanderlip  does  not  say.  The  socialists  assert  that  no  remedy  is 
possible  under  the  capitalistic  system.  That  system,  they  declare, 
lives  by  the  profits  it  sweats  out  of  the  subsistence  of  labor.  But  this 
is  to  overlook  the  fact  that  profits  are  highest  and  most  certain  in 
those  industries  and  in  those  countries  where  labor  is  best  paid.  How 
labor  lives  and  what  profits  capital  earns  depend  upon  the  efficiency 
of  the  productive  process,  and  that  efficiency,  in  turn,  depends  large- 
ly upon  the  vigor  and  hopefulness  of  labor,  or  in  economic  terms, 
upon  wages  and  other  conditions  of  employment. 

If  capitalism  is  to  become  again  a  stable,  going  concern  it  will 
have  to  recognize  that  the  profits  of  an  industry  alone  are  no  in- 
adequate test  of  fundamental  solvency.  An  industry:  which  pays 
living  wages  and  makes  profits  besides  is  an  asset  to  the  system; 
an  industry  which  makes  profits  but  pays  wages  that  involve  degra- 
dation and  deterioration  of  labor  is  a  liability.  What  capitalism 
must  have  if  it  is  to  survive  is  a  new  solidarity  of  the  propertied 
*  Reprinted  by  permission  of  The  New  Republic,  June  14,  1919,  p.  205. 

149 


150     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

classes  behind  those  employers  who  are  honestly  striving  to  meet 
their  class  obligation  to  labor.  Let  the  sweating  employer  be  anath- 
ema, as  a  traitor  to  the  interests  of  his  class.  Let  the  banker 
scrutinize  loans  to  such  an  employer  as  he  would  loans  to  a  gambling 
house  or  a  brothel.  And  when  the  employees  of  the  sweater  go  out 
on  strike,  let  the  chambers  of  commerce  and  citizens'  unions  vote 
large  contributions  to  the  strike  chest. 

That  sounds  Utopian?  As  in  the  past,  employers  will  stand 
together,  like  Montrose  wi'  Montrose?  There  is  something  fine  and 
touching,  indeed,  in  the  way  all  the  employers  of  a  city  rally  to  the 
defense  of  the  sweating  employer,  although  they  would  not  for 
anything  emulate  his  ways.  There  is  something  fine  and  touching 
in  the  way  a  Himalayan  tribe  takes  a  leprous  member  to  its  bosom. 
Fine  and  touching,  but  in  the  end  fatal  to  the  tribe. 

It  is  time  for  those  who  believe  in  the  system  of  private  property, 
who  wish  to  see  it  survive,  to  recognize  that  it  will  not  live  on  by 
virtue  of  written  constitutions  or  lav/s,  by  virtue  of  the  activity  of 
police  and  constabulary,  militia  and  standing  army,  or  even  by  virtue 
of  traditional  economic  principle  and  the  law  of  inertia.  That  system 
will  live  so  long  as  it  does  its  job;  when  it  fails  hopelessly  in  this 
it  will  perish.  The  job  that  any  controlling  system  must  execute 
satisfactorily  is  the  provision  of  a  wholesome  and  hopeful  existence 
for  the  masses  who  constitute  the  major  part  of  the  personal  forces 
of  society.  This  the  system  of  private  property  can  do  if  it  will 
create  for  itself  a  new  solidarity  and  a  new  statecraft.  But  time 
presses. 

Frank  P.  Walsh:  Living  and  Subsistence  Wage  * 

The  other  provision  alluded  to  was  the  declaration  by  this  [Na- 
tional War  Labor  Board]  of  the  right  of  all  men  and  women  in 
industry  to  receive  a  living  wage.  Now,  that  term  is  one  having 
different  meanings  to  different  persons.  The  living  wage  suggests, 
perhaps,  that  amount  of  wage  which  will  keep  life  in  the  human 
body.  That  is,  of  course,  not  what  we  understand  by  it.  It  has  a 
definite  meaning  in  the  world  of  industry  and  in  the  literature  of 
modern  economics.  It  means  the  amount  of  wage  upon  which  a 
worker  and  his  family  may  be  able  to  subsist  in  health  and  with 
reasonable  comforts. 

We  had  more  difficulty  in  applying  that  principle  than  any 
other.  Three-fourths  of  the  common  laborers  of  this  country  had 
not  been  getting  enough  to  eat,  they  had  seen  their  children  go  into 

*  Address   before   conference   on   Demobilization.      Reprinted   by   per- 
mission of  the  author  and  of  the  Survey  (Dec.  7,  1918). 


THE  FUNDS  OF  REORGANIZATION  151 

industry,  and  a  great  number  of  them  were  compelled  to  take  in 
boarders  to  add  to  the  family  income.  .  .  .  After  research 
among  the  authorities,  government  and  private,  that  had  given 
careful  study  to  the  subject,  and  after  studying  the  budgets  in  all 
wage  hearings  of  late  years,  a  decision  was  made  by  the  [investigat- 
ing] staff,  and  not  by  the  board,  that  the  minimum  on  which  a 
worker  with  a  family  of  three  children  of  school  ages  could  live, 
was  72  cents  an  hour,  or  $34.80  a  week. 

When  we  attempted  to  put  that  into  effect  it  was  impossible  to 
do  so.  We  had  this  evenly  divided  body,  and  the  considerations 
pressed  upon  the  board  particularly  were  these,  that  to  apply  that 
living  wage  at  once  would  so  unsettle  industry  as  to  close,  perhaps, 
many  concerns  necessary  to  carrying  on  of  the  industries  essential 
to  win  the  war — and  again,  that  the  whole  structure  of  our  industrial 
life  was  based  upon  so  low  a  wage  level  that  if  this  increase  had 
been  made  it  would  practically  have  doubled  the  common  labor  rate 
then  prevailing  (not  that  which  had  been  paid  before  this  raise 
came  of  which  we  have  heard  so  much),  further  that  it  would  make 
such  a  change  in  the  income  of  the  operators  of  industrj^,  that  the 
excess  profits  tax  plan  could  not  be  carried  out,  and  in  that  way 
our  every  effort  of  winning  the  war  might  be  circumvented,  .  .  . 

When  we  applied  the  increased  wage,  therefore,  it  was  at  the  rate 
of  42 3^^  cents  per  hour,  and  now  it  is  45  cents  per  hour,  with  the 
addition  of  increased  compensation  for  overtime. 

The  minimum  wage  has  come  to  stay.  I  believe  one  of  the  gains 
of  the  war  will  be  an  acknowledgment  of  the  fact  already  assented 
to  by  the  greatest  employers  of  labor  in  this  country,  that  no  in- 
dustry has  a  right  to  live  that  does  not  pay  every  essential  worker 
in  it  a  living  wage,  and  that  no  state  can  live  whose  productive 
properties  are  dependent  upon  great  establishments  where  that  prin- 
ciple is  not  recognized. 

William  F,  Ogburn:  Measurement  of  the  Cost  of 
Living  and  Wages  * 

The  great  upheaval  in  prices  during  the  past  two  or  three  years 
has  forced  into  the  spotlight  of  public  interest  the  standard  of 
living  as  a  basis  of  v>^age  settlement.  The  cost  of  living  has  risen 
quite  suddenly  and  most  dramatically,  and  unless  wages  rose  with 
the  rise  in  prices  the  net  result  was  an  actual  lowering  of  the  stand- 
ard of  living.  For  this  reason  the  standard  of  living  has  become 
in  a  great  many  cases  the  basis  for  setting  wages. 

*Vol.  LXXXI,  Whole  No.  170,  January,  1919:  The  Annals  of  the 
American  Academy  of  Political  and  Social  Science,  A  Reconstruction 
Labor  Policy,    Reprinted  by  permission.     (Pp.  110-116). 


152      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Thus  the  Shipbuilding  Labor  Adjustment  Board  has  on  three 
occasions  raised  wages  to  the  extent  that  the  cost  of  Hving  has 
risen,  having  done  so  on  each  occasion  only  after  an  extensive  sur- 
vey and  measurement  of  the  increased  cost  of  living  has  been 
made.  The  National  War  Labor  Board  in  nearly  every  case  that 
has  come  before  it  for  settlement  has  considered  evidence  and 
testimony  on  the  increased  cost  of  living.  In  perhaps  half  of  the 
cases  they  have  m.ade  a  settlement  of  wages  directly  on  the  basis 
of  the  increased  cost  of  living,  and  in  many  of  the  cases  specific 
provision  has  been  made  for  the  future  readjustment  of  wages  on 
the  basis  of  changes  in  the  cost  of  living.  The  Railroad  Wage 
Commission  based  a  recent  raise  in  wages  on  'the  results  of  a 
special  nation-wide  survey  into  the  extent  that  the  cost  of  living 
had  risen.  A  number  of  private  employers  have  raised  wages 
after  having  had  special  studies  made  to  determine  the  extent  of 
the  increase  in  cost  of  living.  A  few  companies  have  made  pro- 
vision for  periodic  (in  some  cases  monthly)  increases  of  wages,  in 
accordance  with  the  percentage  increases  in  the  cost  of  living. 
Some  of  these  companies  are  the  Bankers'  Trust  Co.  of  New  York 
City,  The  Index  Visible  (Inc.)  of  New  Haven,  Conn.,  the  Oneida 
Community,  the  Kelly-How-Thompson  Co.  of  Duluth,  Minn.,  the 
George  Worthington  Co.,  and  the  Printz-Biederman  Co.  of  Cleve- 
land.   .    .    . 

Up  to  the  present  time  attempts  have  been  made  to  measure 
three  different  levels  of  living. 

The  first  of  these  is  what  might  be  called  the  poverty  level  and 
for  which  there  have  been  drawn  a  number  of  budgets,  principally 
by  various  charity  organizations  and  philanthropic  societies.  Fam- 
ilies living  at  this  level  receive  charity  in  the  form  of  gifts  or 
free  medical  service  or  in  other  ways.  Or  if  they  do  not  do  this 
they  attempt  to  live  on  a  level  so  low  as  to  weaken  them  eventu- 
ally to  such  an  extent  that  disease  inevitably  overtakes  them. 

The  level  above  the  poverty  line  is  called  the  minimum-of-sub- 
sistence  level.  This  level  varies  of  course  from  country  to  coun- 
try. It  is  spoken  of  here  as  the  American  standard,  it  being 
realized  that  it  varies  somewhat  in  different  parts  of  an  area  so 
large  as  the  United  States.  The  minimum  of  subsistence  will 
also  change  over  a  period  of  time,  irrespective  of  the  level  of  prices. 
What  was  the  minimum  of  subsistence  a  number  of  years  ago  is 
certainly  not  a  minimum  of  subsistence  now.  Quite  a  number  of 
budgets  have  been  set  for  this  level  in  previous  years.  The  study 
made  by  Dr.  Chapin  in  New  York  in  1907  set  such  a  level.  An- 
other was  the  budget  of  the  New  York  Factory  Investigating  Com- 
mission in   191 4.     Such  a  standard  of  living  corresponds  approx- 


THE  FUNDS  OF  REORGANIZATION  153 

imately  with  that  of  common  or  unskilled  labor,  and  is  what  is 
generally  referred  to  as  a  living  wage. 

There  has  also  been  a  tendency  to  recognize  still  another  level 
which  has  been  called  the  minimum  comfort  level,  which  is  of  a 
plane  somewhat  higher  than  that  of  the  minimum  of  subsistence. 
Thus  in  the  autumn  of  191 7  in  Seattle  the  arbitration  board  in  a 
strike  of  the  street  railway  employees  accepted  a  budget  of  $1,500 
for  a  family  of  five.  The  settlement  was  made  on  the  basis  of  a 
budget,  drawn  after  considerable  study,  and  called  the  minimum 
comfort  budget.    .    .    . 

Not  very  much  attention  has  been  given  to  standards  of  living 
above  the  subsistence  level  for  the  purpose  of  setting  wages.  But 
the  department  of  the  National  War  Labor  Board  on  the  cost  of 
living  drew  up  for  the  consideration  of  the  board  a  budget  above 
the  subsistence  level  which  was  called  the  minimum  comfort  level. 
In  June,  1918,  the  cost  of  this  budget  was  $1,760  per  year  for  a 
family  of  five.  These  facts  will  give  the  reader  fairly  good  ideas  of 
various  levels  of  the  standard  of  living  since  the  great  change  in 
prices. 

Samuel  Alschuler:  Award  in  Packing  House  Industries 
hy  United  States  Administrator  * 

With  the  installation  of  the  eight-hour  workday  following  the 
heretofore  ten-hour  day,  there  natually  goes  adjustment  of  the 
hourly  and  piece  work  wage  rate  so  that  in  the  full  eight-hour  work 
day  there  is  earned  an  amount  equal  to  that  theretofore  earned  in  the 
full  ten-hour  workday.  The  evidence  for  the  employees  and  em- 
ployers as  well,  is  unanimous  to  the  effect  that  whatever  the  eco- 
nomic workday  is  found  to  be,  it  should  under  normal  conditions 
afford  to  the  workman  a  day's  living  wage  for  himself  and  family 
of  average  size,  generally  considered  to  be  wife  and  three  children 
of  about  school  age.  The  proposition  itself  is  too  clear  to  require 
elaboration.  The  superintendents  agreed  that  while  so-called  market 
price  of  labor,  as  evidenced  by  what  other  industries  pay  for  it, 
should  have  some  influence,  yet  in  any  event  it  should  be  a  living 
wage. 

While  it  might  seem  that  the  term  "living  wage"  should  itself 
fix  its  boundaries  and  convey  its  significance,  it  is  one  of  those 
phrases  not  capable  of  exact  definition  but  is  quite  dependent  on  the 
viewpoint  of  the  one  who  employs  it.  While  it  might  generally  be 
understood  to  be  a  wage  affording  a  living  suited  to  one's  condition 

*  Reprinted    from  Monthly   Labor  Review,   May,    1918,   Vol.   VI — No. 
5,  p.  1 170. 


154     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

in  life,  it  could  hardly  be  said  that  if  because  of  an  unreasonably 
low  wage  the  condition  of  the  employee  in  life  sinks  low,  but  that 
his  family  manages  to  subsist  thereon,  that  the  condition  in  life  of 
this  family  is  thereby  established,  and  that  the  wage  paid  is  suited 
thereto.  A  living  wage  surely  imports  something  more  than  this. 
On  the  other  hand,  the  common  laborer's  living  wage  cannot,  under 
the  existing  order  of  things,  be  said  to  include  extravagance  and 
superfluities  which  only  those  of  large  means  can  afford.  On  behalf 
of  the  employees  various  so-called  "living  budgets"  were  presented. 
With  the  best  of  intent  these  must,  it  seems  to  me,  reflect  more 
or  less  the  point  of  view  of  those  who  gathered  the  data  or  those 
who  compiled  them.  When  they  are  made  from  observations  of 
what  a  given  number  of  families  has  actually  required  to  maintain 
them,  they  may  not  afford  a  just  guide  for  those  families  whose  earn- 
ings are  customarity  sufficient  to  warrant  better  living,  or  for  families 
whose  earnings  were  unduly  low,  but  which  nevertheless  have  been 
compelled  to  subsist  thereon,  deprived  of  many  things  which  they 
ought  to  have  had  but  could  not  for  lack  of  means  procure.  As  to 
whether  or  not  the  m.an  with  low  wages  has  been  compelled  unduly 
to  so  deprive  himself  and  his  family  and  if  so  to  what  extent,  affords 
room  for  wide  divergence  of  opinion  depending  in  large  measure 
upon  the  personal  views  and  experiences  of  those  who  make  or  in- 
terpret the  budgets.  Those  used  to  better  living  might  include  more, 
and  those  not  so  accustomed  less.  The  budgets  presented  at  the 
hearing  varied  from  $800  to  about  $2,000.  While  budgets  are  help- 
ful, there  is  difficulty  in  reconciling  them  to  each  other,  and  to  the 
actual  conditions  with  which  we  have  to  deal. 

From  Address  before  Conference  on  Demohilization, 
November  29-30,  1918.  FelLv  Frankfurter,  Chair- 
man, United  States  War  Labor  Policies  Board. 

The  war  has  left  a  deposit  of  new  federal  standards  in  regard  to 
industrial  relations.  When  it  broke  out  we  found  ourselves  with 
but  very  few  standards  and  meager  machinery  with  which  to  en- 
force them.  There  were  some  provisions  in  regard  to  the  hours  and 
pay  of  some  of  the  federal  employees.  There  was  also  a  body  of 
knowledge  available  in  the  Department  of  Labor.  But,  suddenly, 
the  government  had  thrown  on  it  the  functions  of  an  employer  on 
a  vast  scale  and  it  was  compelled  to  adopt  new  and  additional  stand- 
ards as  to  the  relation  between  employee  and  employer  for  the 
exigent  purpose  of  producing  war  materials.  Thus,  the  government 
of  the  United  States  as  an  employer,  direct  and  indirect,  had  to 


THE  FUNDS  OF  REORGANIZATION  155 

formulate  measures  and  standards  of  industry,  far  in  advance  of 
the  standards  which  existed  prior  to  the  war.  Those  standards 
arose  from  a  practical,  immediate  need.  And  on  the  whole  one  of 
the  great  lessons  of  the  war  is  that  the  adoption  of  so-called  indus- 
trial standards,  involving  also  standards  of  distribution  of  the  prod- 
uct, results  in  a  better  and  more  continuous  output. 

What  are  those  standards?  They  are  as  to  hours  and  wages,  as 
to  safeguards  against  physical  injury  to  employees,  as  to  employ- 
ment of  children  and  of  wom.en,  as  well  as  standards  aiiecting  the 
mode  of  dealing  with  disputes,  the  right  to  organize,  the  process  of 
contact  between  mana'^ement  and  men,  and  certain  community 
standards  outside  industrial  plants  but  intimately  bearing  upon  it. 


3.    NATIONAL  CREDIT  AND  TAXATION 

Irving  Fisher:  Making  Posterity  Pay  * 

Some  people  think  if  they  subscribe  to  bonds  they  are  making 
posterity  pay.  It  is  ordinarily  supposed  that  the  distinction  be- 
tween loans  and  taxes  is  just  that  between  paying  to-day  and 
paying  later.  That  is  not  the  case  at  all.  We  pay  for  this  war 
now.  We  cannot  provide  shoes  and  guns  and  other  supplies  for  the 
soldiers  to-day  from  posterity.  The  cost  has  to  be  produced  to-day 
in  terms  of  goods.  It  is  perfectly  obvious  that  the  cost  of  the  war 
in  guns,  food,  and  clothes,  is  a  cost  to-day,  because  if  we  should  wait 
for  posterity  to  make  the  shoes  and  the  guns,  the  soldiers  to-day 
would  not  have  any  footwear  or  any  means  of  firing  off  their 
cartridges. 

The  same  is  true  in  terms  of  money.  No  one  will  dispute  this 
when  we  are  talking  of  taxes,  but  many  dispute  it  when  talking  of 
loans.  Probably  nine  people  out  of  ten  in  this  country  are  under 
the  impression  that  when  the  government  goes  into  debt  we  are 
simply  postponing  the  payment.  So  far  as  the  government  budget 
is  concerned,  that  is  true,  but  so  far  as  the  nation  is  concerned  it 
is  not  true,  providing  the  bonds  are  held  in  this  country,  as  they 
are  for  the  most  part.  When  posterity  pays  off  those  bonds  it 
does  not  pay  this  generation.  It  pays  itself.  It  has  to  tax  itself  in 
order  to  pay  itself,  and  if  the  subscriptions  were  ideally  distributed, 
what  would  happen  would  be  simply  that  I  would  have  to  take  out 
of  one  pocket  a  thousand  dollars  of  taxes,  give  it  over  to  the  gov- 
ernment, and  then  the  government  would  give  me  that  thousand 
dollars  and  I  would  put  it  in  the  other  pocket  as  payment  for  the 
principal  of  my  bonds.  Evidently  it  would  amount  to  the  same  thing 
if  we  simply  repudiated  the  debt,  and  then  I  would  have  taken  my 
money  out  of  one  pocket  and  have  put  it  in  the  other  pocket  as  pay- 
ment for  the  principal  of  my  bonds.  Evidently  it  would  amount 
to  the  same  thing  if  we  simply  repudiated  the  debt,  and  then 
I  would  have  taken  my  money  out  of  one  pocket  and  have  put  it  in 
the  other  pocket  without  having  it  go  through  the  government  at  all. 

It  is  very  clear  that  when  posterity  pays  itself  it  is  not  making 

*  Reprinted  by  permission  from  the  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  Vol.  LXXVIII,  No.  167,  July,  1918. 

156 


THE  FUNDS  OF  REORGANIZATION  157 

any  sacrifice.  You  might  just  as  well  talk  in  terms  of  the  credits 
instead  of  debits  involved.  You  might  just  as  well  say  that  by 
issuing  bonds  to-day,  instead  of  saddling  posterity  with  a  huge  debt, 
you  are  enriching  posterity,  because  posterity  is  going  to  get  the 
principal  when  these  bonds  are  paid.  It  is  exactly  as  broad  as  it 
is  long.  The  only  difference  comes  in  the  distribution.  There 
will  be  many  who  in  posterity  will  take  out  of  one  pocket  more 
than  they  will  get  to  put  in  the  other  pocket  because  their  taxes 
will  exceed  the  bonds  that  they  hold,  and  the  same  thing  the  other 
way  around.  It  has  happened  in  the  past,  for  instance,  that  the 
rich  who  run  the  government  would  buy  the  bonds  and  then  in 
posterity  would  tax  the  poor,  and  the  result  would  be  that  in  pos- 
terity, the  rich  would  be  living  on  the  poor.  To-day  it  is  almost 
the  other  way  around.  As  we  are  distributing  the  bonds  very  widely 
the  poor  who  subscribe  are  becoming  creditors  and,  in  the  future, 
through  big  income  taxes,  it  will  not  be  at  all  surprising  to  find 
the  rich  ones  paying  the  poor. 

J.  Laurence  Laughlin:  The  Credit  of  Nations  *  (pp.  1, 
10-11,  58,  141-2,  193-196,  276,  354) 

When  Lord  Kitchener  based  the  success  of  the  Allies  in  the 
European  war  on  "men,  munitions,  and  money,"  obviously  he  used 
the  term  "money"  in  the  sense  of  credit.  Out  of  every  five  dollars 
spent  at  least  four  dollars  is  obtained  by  credit.  Since  more  than 
$100,000,000,000  has  already  been  spent  by  European  Powers  on 
the  war,  it  is  clear  not  only  that  no  such  sum  of  money  was  in 
existence,  but  also  that  war  has  not  destroyed  actual  money.  For 
instance,  there  is  even  more  gold  in  the  world  to-day  than  before 
the  war;  and  certainly  there  is  much  more  paper  money.  In  brief  it 
is  wealth,  or  goods,  in  some  form  which  has  been  destroyed;  and  it 
is  only  the  prices  of  these  goods  expressed  in  money  which  count  up 
into  the  enormous  totals.  These  goods  were  priced  in  some  monetary 
standard,  like  gold;  and  some  money  may  have  been  used  in  the 
exchanging  of  the  goods  from  seller  to  buyer;  but  it  was  the  modern 
credit  system  which  made  the  use  of  much  money  in  this  process 
of  exchange  quite  unnecessary. 

The  important  thing  to  a  country's  prosperity  is  not  the  amount 
of  money  nor  of  a  medium  of  exchange  which  it  has  within  its 
borders,  but  the  volume  of  goods  it  has  which  satisfy  wants.  It  is 
not  the  tickets  by  which  the  milkman  counts,  but  the  number  of 
quarts  of  milk,  which  are  primary.  In  foreign  trade,  likewise,  the 
matter  of  chief  importance  is  not  the  quantity  of  bills  of  exchange, 

*  Reprinted  by  permission  of  Charles  Scribner's  Sons,  New  York, 


158     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

but  the  actual  production  and  movement  of  grain,  cotton,  munitionSj 
and  the  like,  in  exports  or  imports.  Only  because  of  the  movement 
of  such  goods  or  of  securities  (which  are  title  to  goods  and  property) 
do  bills  of  exchange  come  into  existence.  That  is,  want-satisfying 
goods  are  primary ;  money  and  forms  of  credit  are  secondary.  Goods 
undcrHe  all  legitimate  and  continuing  credit  operations.  When 
sajang  in  general  terms  that  credit  is  based  upon  goods,  it  is  under- 
stood, of  course,  that  it  is  concerned  not  only  with  goods  actually 
in  existence  now  being  exchanged  but  also  with  goods  coming  forward 
day  by  day,  in  the  steady  operation  of  established  industries,  as 
well  as  with  securities  of  various  kinds,  which  are  in  fact  titles  to 
goods  or  to  going  concerns  engaged  in  providing  economic  services. 
Money,  gold,  checks,  the  various  media  of  exchange,  are  only  con- 
venient devices  for  expediting  essential  transactions  in  goods.  Al- 
though credit  is  itself  an  exchange  of  goods  involving  the  return  of 
an  equivalent  in  the  future,  the  forms  of  credit  arising  out  of  such 
transactions  are  various — book  accounts,  bills  receivable,  notes, 
checks,  bills  of  exchange  and  the  like.  Some  forms  of  credit — such 
as  checks  or  bills  of  exchange — also  serve  as  media  of  exchange,  if 
made  payable  on  demand  by  recognized  institutions,  and  thus  per- 
form some  of  tlie  work  of  money. 

The  funds  needed  on  the  unexampled  scale  of  modern  wars  can 
be  obtained  either  by  taxation  or  by  loans.  Obviously,  taxation  even 
as  heavy  as  that  now  levied  by  Great  Britain  can  provide  only  a 
part  of  the  great  sums  consumed  by  this  war.  Therefore,  the  main 
reliance  of  all  the  belligerents  must  be  on  loans,  that  is,  on  the  use 
of  credit.  When  it  is  asked,  "W^here  does  all  the  migney  come  from 
to  carry  on  this  stupendous  war?"  it  will  readily  appear  in  answer 
that  the  cost  of  war  is  largely  represented  by  the  destruction  of 
goods,  referable  to  money  only  as  a  means  of  recording  their  value, 
and  that  money  plays  a  role  secondary  to  goods.  It  is  the  quantity 
of  goods  demanded  by  war  which  forms  the  real  economic  expense 
of  this  terrible  struggle.  Money  remains;  goods  are  destroyed.  The 
war  is  really  being  carried  on  by  credit.    .    .    . 

Early  in  the  nineteenth  century  the  purchasing  power  of  a  busi- 
ness man  was  largely  confined  to  the  amount  of  money  he  could  com- 
mand; but  the  rise  of  credit  increased  the  available  purchasing 
power  by  the  enormous  mass  of  staple  goods  bought  and  sold,  which 
became  the  best  possible  basis  of  bank  assets.  Bankable  goods 
became  synonymous  with  all  articles  having  a  liquid,  salable  quality. 
In  the  time  of  Ricardo  credit  had  little  place  in  the  economic  world. 
To-day  it  is  of  first  importance,  not  only  in  all  private  transactions, 
but  in  the  fiscal  operations  of  all  governments,  while  its  influence 
upon  prices  and  the  principles  of  money  has  been  much  misunder- 


THE  FUNDS  OF  REORGANIZATION  159 

stood.  Ricardo  expressed  a  belief  that  prices  of  goods  depended  on 
the  quantity  of  money  in  circulation;  but  to-day  an  undreamed-of 
volume  of  goods  are  exchanged  by  forms  of  credit  practically  with- 
out the  intervention  of  any  money.  For  instance,  in  the  United 
States  alone  goods  to  the  amount  of  $173,000,000,000  were  ex- 
changed by  the  use  of  checks  in  one  year  ( 1913). 

Moreover,  the  growth  of  capital  directed  to  banking  for  the 
purpose  of  providing  credit  to  those  engaged  in  producing  and  dis- 
tributing goods  has  gone  on  pari  passu  with  the  demands  of  an 
enormously  increased  output  of  goods. 

But  the  increase  of  banking  goods,  which  is  synonymous  with  the 
operations  of  credit,  is  not  to  be  measured  by  the  amount  of  bank- 
ing capital  (and  surplus)  but  by  the  credit  work  performed  by  that 
capital,  that  is,  by  the  growth  (in  Anglo-Saxon  lands)  of  deposits; 
since  loans  result  directly  in  deposits,  and  the  relationship  between 
loans  and  deposits  is  close.  In  the  last  thirty  years  the  deposit  item 
of  our  national  banks,  which  may  be  taken  as  fairly  representative 
of  banking  and  credit  development,  increased  from  1880  to  19 10  by 
534  per  cent;  or  if  all  banks,  except  savings  banks,  be  taken,  the 
gain  has  been  754  per  cent. 

In  international  trade  the  bill  of  exchange  serves  as  a  medium 
of  exchange  and  balances  only  are  paid  in  coin  or  bullion.  The 
discovery  that  goods  (after  being  priced  in  some  standard)  could 
be  safely  bought  and  sold  by  credit  devices,  amounts  being  off-set 
against  each  other  in  opposing  currents  of  domestic  and  foreign 
trade,  without  passing  from  hand  to  hand,  has  produced  a  mechanism 
of  flexibility  and  power,  rising  to  almost  incredible  achievements, 
which  was  unknown  in  earlier  decades.  .  .  . 

It  is  sometimes  explained  that  credit  depends  upon  and, is  limited 
by  money  (especially  that  in  bank  reserves).  This  view,  however, 
looks  only  at  the  external  and  purely  mechanical  processes  through 
which  the  fundamental  sources  of  credit  register  themselves.  The 
European  War  is  forcing  us  to  revise  some  traditional  beliefs.  One 
wonders  that  belligerents  can  keep  up  the  struggle  without  either 
economic  exhaustion  or  financial  bankruptcy.  If  the  inability  to 
meet  demand  obligations  in  the  usual  gold  of  international  payments 
is  an  evidence  of  bankruptcy,  then  several  countries  are  already 
bankrupt.  But  how  can  they  keep  on?  It  is  obviously  a  question, 
not  of  money,  but  solely  of  getting  the  goods  needed  in  war.  What 
is  often  overlooked  is  the  phenomenal  extent,  in  this  modern  era 
of  new  power  and  highly  developed  machinery,  of  the  surplus  of 
goods  above  the  necessaries  of  life.  It  is  almost  inconceivably 
large.  As  long  as  this  prodigious  surplus — or  rather,  the  labor, 
capital,  and  resources  by  which  this  surplus  is  created — is  not  used 


i6o     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

up,  a  nation  can  go  on  fighting.  Of  course,  in  a  case  like  that  of 
Germany,  the  effect  is  that  of  practical  confiscation  of  all  surplus 
production  to  carry  out  a  national  purpose.  .  .  . 

In  view  of  the  accumulation  of  this  (British)  vast  debt  in  three 
years  of  war,  with  the  end  not  yet  in  sight,  the  mind  at  once  ques- 
tions the  future.  Of  the  ability  of  the  English  to  carry  this  colossal 
war  debt  there  can  be  little  doubt.  The  willingness  to  pay  over 
$2,500,000,000  in  taxes  per  year  is  a  factor  of  great  significance 
affecting  the  credit  of  the  country  and  the  standing  of  its  securities. 
It  is  a  policy  which  stands  out  in  bold  contrast  to  that  of  Germany, 
which  has  adopted  the  principle  of  taxing  little  (evidently  having 
counted  on  victory  and  large  indemnities)  and  funding  a  great  debt 
in  long-term  securities.  Obviously,  Great  Britain  has  in  mind  no 
indemnities  as  a  means  of  lightening  her  burden  of  debt.  If  we  are 
disposed  to  measure  British  credit,  or  borrowing  power,  by  her 
ability  to  produce  goods  in  the  future,  to  hold  her  own  in  the  compe- 
tition of  international  markets,  it  must  be  clear  that  the  exigencies 
of  war  have  unmistakably  awakened  and  stimulated  her  productive 
efficiency — wholly  apart,  of  course,  from  the  sickening  loss  of  life 
and  the  patent  destruction  of  capital.  All  in  all,  instead  of  material 
considerations  as  to  economic  resources,  it  is  the  spirit  in  which  she 
is  likely  to  take  up  the  work  of  the  future — as  to  which  there  need 
be  entertained  little  doubt — on  which  most  emphasis  should  be 
placed.    .    .    . 

What  is  to  be  said  as  to  the  capacity  of  France  to  carry  this 
load — or  a  load  even  increased  by  added  years  of  war  still  to 
come?  The  annual  charges  on  the  debt  would  now  absorb  nearly 
the  total  revenue  of  19 14,  and  even  before  that  year  it  seemed  as 
if  taxes  had  reached  the  limit.  In  this  war,  however,  what  has  seemed 
incredible  has  in  many  instances  turned  out  to  be  possible.  The 
thrift  of  the  French  has  long  been  noted.  In  France,  if  in  any  coun- 
try seared  as  it  has  been  by  losses  of  life  and  property,  the  psy- 
chology of  sacrifice  for  a  future  gain  will  allow  the  largest  part  of 
the  excess  of  production  over  a  low  margin  of  subsistence  to  be 
turned  over  to  the  state  either  in  taxes  or  in  subscriptions  to  funded 
debt.  Already  these  subscriptions  have  passed  all  expectations.  No 
one  seems  to  have  realized  how  large  a  margin  over  subsistence  has 
grown  in  these  latter  years  of  mechanical  appliances  and  of  the  era 
of  new  power.  It  is  out  of  this  enormous  surplus  that  the  amazing 
extravagance  of  recent  years  has  been  made  possible;  and,  if  extrav- 
agance ceases,  to  the  same  extent  can  it  bear  the  waste  of  war, 
without  much  impairing  the  forces  of  production  (except  by  loss  in 
changing  to  war  industries,  loss  of  labor,  etc. 

The  psychological  shock  caused  by  the  frightful  losses  of  France 


THE  FUNDS  OF  REORGANIZATION  i6i 

which  brings  home  the  obligation  of  refraining  from  unnecessary 
consumption — everything  above  the  minimum  needed  for  health — ■ 
will  yield  an  incredible  fund  of  savings.  The  increase  of  savings 
even  during  the  war  has  been  amazing;  although  much  is  hoarded. 
So  strong  is  French  thrift  that  it  forms  the  basis  of  the  estimates 
of  a  Minister  of  Finance  when  he  needs  loans.  From  such  sources, 
as  well  as  from  the  earnings  of  industry  and  trade,  capital  has 
grown  until  it  is  estimated  that  the  invested  capital  of  France,  as 
before  noted,  amounts  to  $22,000,000,000,  of  which  foreign  securities 
owned  by  citizens  are  placed  at  $8,000,000,000.  The  income  alone 
from  securities  owned  by  the  French  is  stated  to  be  over 
$1,000,000,000.  In  191 1  the  annual  savings  of  France  were  put  at 
$600,000,000,  of  which  sum  $400,000,000  were  available  for  invest- 
ment in  securities.  In  trying  to  find  the  total  fund  from  which 
savings  can  be  made  we  get  nothing  very  definite.  The  estimates 
of  total  wealth  are  of  doubtful  value;  but  that  for  France  has  been 
given  by  Helfferich  as  $70,000,000,000,  and  her  total  income 
$6,000,000,000.  As  the  strength  of  the  desire  to  save  increases,  an 
even  larger  total  of  savings  may  be  made  out  of  a  lessened  fund 
of  wealth.  To  the  savings  and  investments  of  France,  the  Treasury 
must  look  for  the  resources  to  float  its  loans.  If  all  securities  owned 
by  the  French  were  offered  in  exchange  for  the  debt  of  France,  the 
whole  of  that  now  existing  ($21,000,000,000)  could  be  absorbed 
at  home.  Or,  if  the  foreign  securities  owned  in  France  were  sold, 
they  would  take  up  more  than  one-third  of  the  present  enormous 
debt.  Or,  again,  if  one-tenth  of  the  total  annual  income  of  France 
were  saved,  the  whole  debt  now  existing  could  be  taken  up  in  thirty- 
seven  years.    .    .    . 

In  estimating  the  ability  of  France  to  carry  the  burden  of  this 
gigantic  war  debt,  the  middle  class  and  the  peasants  must  be  kept 
in  mind.  The  matter  is  a  psychological  one.  It  is  a  question  of 
the  traits  and  qualities  of  her  people.  If  nearly  all  the  margin  of 
goods  produced  by  an  energetic  people  over  and  above  the  neces- 
saries of  life  is  saved,  even  the  prodigious  war  debt  and  the  heavy 
taxation  may  be  successfully  carried.  One  writer  instances  three 
tim.es  in  the  past  three  centuries  when  France  ''has  been  completely 
defeated  and  left  in  a  state  of  seeming  economic  exhaustion — at  the 
end  of  the  long  campaign  of  Louis  XIV,  at  the  final  overthrow  of 
Napoleon,  and  at  the  crushing  climax  of  the  Franco-Prussian  con- 
flict. .  .  .  Yet,  after  each  of  these  experiences,  the  world 
witnessed  the  extraordinary  spectacle  of  France  promptly  resuming 
her  place  in  the  economic  system,  and  in  the  end  displaying  a 
tangible  economic  power  even  greater  than  before."  .  .  . 

By  credit  operations,  losses  are  thrown  for\vard  on  the  future. 


i62      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Germany's  borrowing  power  (in  this  case  at  home),  her  credit,  de- 
pends upon  the  belief  of  lenders  in  her  producing  power,  not  in  the 
exceptional  emergencies  of  war,  but  in  normal  conditions  of  peace. 
Her  ability  to  carry  her  staggering  burden,  therefore — if  she  does 
not  repudiate — depends  upon  her  power  to  produce  in  the  future. 
Then  will  come  into  play,  under  conditions  which  will  stimulate 
them  to  the  utmost,  her  characteristic  persistence,  thrift,  organizing 
power,  energy,  and  industrial  efficiency.  If  exceptional  reasons  exist 
for  restoring  capital  and  the  effective  desire  of  accumulation  becomes 
intensely  active,  it  would  be  possible  to  add  to  capital  almost 
all  the  annual  surplus  of  wealth  above  necessaries,  and  in  a  sur- 
prisingly short  time  there  would  be  as  much  capital  in  existence 
as  before;  and  then  could  begin  again  extravagance  and  waste 
and  the  loss  of  capital  in  overconfident  speculation.  Also,  in  spite 
of  the  frightful  losses  of  man  power,  we  all  know  when  restraints 
upon  population  are  removed,  with  what  amazing  rapidity  numbers 
increase  to  the  point  where  they  are  limited  only  by  the  standards  of 
living.  Whatever  the  outcome  of  the  war  there  is  not  much  doubt 
of  the  continuance  of  the  racial  characteristics  in  the  typical  German 
residuum.    .    .    . 

The  cross-currents  and  the  contradictions  of  this  war  often 
appear  inexplicable.  It  is  because  unexpected  results  have  been  set 
in  operation  by  psychological  forces  which  could  not  have  been  es- 
timated beforehand.  Not  the  least  important  of  these  is  the  psy- 
chology of  capital-making.  No  one  has  doubted  the  phenomenal 
productive  capacity  of  the  United  States.  The  energizing  influence 
of  the  new  era  of  power  and  machinery  has  been  displayed  on  the 
vast  natural  resources  of  this  country  and  expanding  volume  of  prod- 
uct unequaled  by  any  other  nation.  As  a  consequence,  the  estimated 
national  wealth  of  the  United  States  has  been  placed  at  $187,- 
000,000,000  in  191 2  as  against  $88,000,000,000  in  1900.  Such  is 
the  basis  on  which  the  supply  of  capital  rests.  Long  since  it  has 
been  an  economic  commonplace  to  say  that  saving  of  capital  depends 
on  two  things:  (i)  The  extent  of  the  margin  above  the  neces- 
saries of  life  from  which  savings  can  be  made;  and  (2)  the  strength 
of  the  desire  to  save.  As  regards  this  margin,  we  have  never 
realized  its  extent.  In  recent  decades  we  have  seen  the  rise  of 
large  fortunes  and  a  display  of  extravagance  which  has  advertised  in 
every  possible  way  our  enormous  capacity  for  consumption  in  things 
not  actually  necessary  for  physical  existence.  No  one  can  begin 
to  estimate  what  would  be  the  effect  on  the  accumulation  of  Ameri- 
can capital  if  all  or  even  a  large  part  of  this  capital  were  saved.  We 
have  never  fully  recognized  as  things  have  been  ^oing  on  in  times 
of  peace  the  useless  destruction  of  wealth  by  an  expenditure  on 


THE  FUNDS  OF  REORGANIZATION  163 

unnecessary  consumption — articles  which  when  consumed  leave  noth- 
ing in  their  stead — has  constantly  been  as  great  as  that  caused  by 
vast  armies  in  time  of  war.  Then  apply  to  our  uncounted  billions  of 
surplus  above  necessaries  an  exceptional  stimulus  to  the  will  to  save. 
The  effect  may  seem  like  a  miracle,  but  it  is  all  within  the  limits  of 
achievement  if  we  so  wish.  When  the  war  broke  out,  the  un- 
certainty caused  by  the  shock  and  the  general  depression,  induced 
by  the  world-wide  disaster  almost  unconsciously  led  everyone  to 
economize. 

T.  .S'.  Adams:  The  Excess  Profits  Tax  * 

In  discussing  these  topics  I  speak  not  only  unofficially,  but  tenta- 
tively; I  express  only  my  personal  opinions,  and  those  opinions 
are  subject  to  later  revision.  .  .  . 

What  I  have  been  considering  is  the  eminently  practicable 
problem  of  the  future  of  the  excess  profits  tax;  will  it  endure — 
should  it  be  permitted  to  endure  after  the  war? 

I  do  not  pretend  to  give  the  final  answers  to  these  questions 
even  in  my  own  mind.  But  they  are  questions  about  which  we 
should  begin  to  think  seriousl}''.  It  is  sometimes  said  that  the 
country  which  imposes  an  excess  profits  tax  after  the  war  will 
so  hamper  its  business  as  to  deny  it  any  share  in  the  international 
trade  of  the  world;  in  short,  that  it  will  place  domestic  industries 
at  a  disadvantage  in  competing  with  foreign  industries. 

Whether  this  criticism  be  sound  or  unsound  depends  upon  many 
factors,  among  which  must  be  included  the  relative  burden  of  all 
taxation  in  this  country  as  contrasted  with  foreign  countries;  the 
equity  and  care  with  which  this  and  other  taxes  are  formulated 
and  administered;  and  most  of  all  upon  the  truth  of  the  theory  upon 
which  the  tax  rests.  It  is  either  true  or  not  true  that  the  success 
of  business  enterprise  depends,  in  part,  upon  the  helpful  participa- 
tion of  the  state.  This  is  either  genuine  truth  or  humbug.  If  it 
be  a  genuine  truth,  business  can  afford  to  pay  for  the  assistance 
of  the  state.  If  it  be  merely  false  and  hollow  rhetoric,  American 
business  enterprise  will  fall  before  foreign  competitors  which  do  have 
the  real  support  of  their  respective  governments.  In  general,  what 
business  fears  is  not  heavy  taxation,  but  unjust  and  discriminatory 
taxation,  careless  taxation,  bungling  attempts  to  do  the  impossible, 
inconsistent  taxation,  the  unlike  treatment  of  like  business  situa- 
tions. 

Such  a  tax  might  serve  appreciably  to  allay  hostility  to  big 

*  Reprinted   from  the  Annals  of  the  American  Academy   of  Political 
and  Social  Science^  Vol.  LXXV,  January,  1918.    Financing  the  War. 


i64     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

business  by  making  the  people  a  partner  in  the  success  of  big  busi- 
ness. As  pointed  out  several  years  ago  by  Henry  C.  Adams,  such 
a  tax  fits  in  harmoniously  with  the  policy  of  rate  regulation  or 
price  regulation.  We  shall  probably  have  more  of  such  regulation 
as  time  goes  on;  and  this  regulation  must,  in  all  probability,  be 
accomplished  through  general  rules  which,  adapted  to  the  less  favor- 
ably situated  producers,  yield  excessive  returns  to  the  more  favor- 
ably situated  producers.  Under  such  circumstances,  a  tax  upon 
excess  profits  makes  the  results  of  price  regulations  more  equitable 
and  more  attractive.  Some  such  device  as  this  would  appear  to 
promote  individualism  and  private  industry.  Not  only  land  sites, 
as  Henry  George  emphasizes,  but  other  commercial  and  industrial 
opportunities  differ  enormously.  We  cannot  give  to  each  industry 
the  same  opportunities  of  location,  proximity  to  markets,  good 
shipping  facilities,  good  credit  institutions  and  good  government; 
but  we  can  make  inequalities  a  little  less  by  imposing  a  tax  upon 
the  differential  product — upon  excess  profits.  Conceivably  then,  the 
excess  profits  tax  may  assist  materially  to  promote  that  equality  of 
opportunity  which  is  as  necessary  to  good  business  as  to  good  citizen- 
ship. 

Lack  of  productivity  wall  probably  prove  the  gravest  weakness 
of  the  excess  profits  tax  as  a  permanent  part  of  the  tax  system. 
In  normal  years  we  cannot  expect  a  tax  upon  supernormal  profits 
to  yield  the  enormous  revenue  which  we  expect  to  derive  from  this 
source  during  the  war.  And  yet,  it  is  probable  that  even  in  lean 
years  the  tax  would  supply  a  revenue  altogether  worth  while.  In  our 
vast  country  it  seldom  or  never  happens  that  all  sections  and  all 
industries  move  together.  When  there  is  drought  or  financial  de- 
pression in  one  part  of  the  country,  other  sections  enjoy  abundant 
crops  and  prosperous  business  conditions.  Where  an  epidemic 
prevails,  the  doctors,  at  least,  do  a  thriving  business.  There  will 
always  be  some  excess  profits  to  tax. 

But  if  the  tax  is  to  succeed,  we  must  solve  this  problem  of 
establishing  a  sound  normal  basis  upon  which  to  measure  the  excess. 
In  determining  this  normal  datum  line  we  can,  as  has  been  stated, 
use  either  past  income  or  invested  capital;  indeed  the  difficulties 
are  so  great  that  we  should  make  use  of  both.  It  would  be 
theoretically  possible,  for  instance,  to  take  the  income  for  a  consider- 
able number  of  years,  exclude  the  abnormal  years  and  accept  the 
remainder  as  our  datum  line.  But  even  in  this  case  we  should 
have  to  make  allowances  for  the  increase  in  capital;  and  for 
this  and  other  reasons,  the  United  States,  in  contrast  with  most 
of  the  other  thirteen  or  fourteen  countries  imposing  the  excess  profits 
tax,  prefers  to  start  with  the  capital  basis.  .  .  . 


THE  FUNDS  OF  REORGANIZATION  165 

My  own  belief  is  that  the  most  practicable  treatment  yet  sug- 
gested for  this  situation  is  a  valuation  of  capital  assets  as  of  some 
date,  say  January  first,  preceding  the  war.  We  must  get  rid  of 
th°  war,  that  greatest  of  all  abnormalities  ...  we  must  start  with 
a  practicable  and  reasonably  equitable  determination  of  normal 
capital  value.  Until  this  foundation  of  the  tax  has  been  built,  and 
built  upon  rock,  the  excess  profits  tax  can  only  be  a  temporary 
makeshift. 

Resolution  on  Taocation  hy  the  National  Association  of 
Manufacturers  * 

Whereas,  the  Committee  on  Taxation  of  the  National  Associa- 
tion of  Manufacturers  has  placed  before  this  Association  a  construc- 
tive policy  and  a  program  of  remedial  improvement  in  the  present 
law,  therefore  be  it 

Resolved,  that  the  National  Association  of  Manufacturers  in 
convention  assembled  recognizes  that  industry  must  generously  con- 
tribute to  meet  the  great  burden  imposed  by  the  necessities  of 
national  defense  and  readjustment  but  that  no  system  of  taxation 
can  be  in  the  public  interest  that  does  not  undertake  to  spread  the 
burden  of  public  support  in  due  proportion  over  all  classes  of  our 
citizenship;  to  disproportionately  burden  industrial  investment  and 
production  is  to  discourage  those  factors  of  national  life  which  by 
their  nature  contribute  most  powerfully  to  social  progress. 

The  resolution  was  agreed  to. 

J.  A.  Hohson:  The  Industrial  System^   (pp.  224-5) 

As  "unearned  income"  this  unproductive  surplus  is  seen  to  be 
the  only  properly  taxable  body,  for  any  tax  which  falls  upon  that 
income  which  is  either  cost  of  production  or  productive  surplus 
encroaches  on  the  fund  of  maintenance  or  progress,  thus  reducing 
the  future  efficiency  of  industry.  It  is,  therefore,  of  paramount 
importance  to  the  State  to  discover  the  forms  and  the  magnitude 
of  the  "unproductive  surplus."  For  a  sound  fiscal  policy  will  be 
directed  to  secure  for  the  State  from  this  source  such  public  income 
as  it  requires  for  the  development  of  public  services.  .  .  . 

This  is  the  supreme  issue  of  public  finance,  to  determine 
what  proportion  of  the  surplus  can  be  advantageously  taken  as 
public  income  to  be  applied  to  the  growth  of  state  functions.  This 
proportion  will  evidently  vary,  not  merely  with  the  nature  of  the 

*  Proceedings,   May  21,   1919. 

t  Copyright,  The  Macmillan   Company.    Reprinted  by  permission. 


i66      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

political  economic  civilization,  but  with  the  actual  conditions  of 
the  distribution  of  the  surplus.  Where  the  "surplus"  is  small,  and 
upon  the  whole  is  apportioned  in  accordance  with  the  "needs"  of 
the  several  factors  of  production,  the  state  would  make  a  moderate 
use  of  its  taxing  power,  having  in  mind  the  nice  adjustment  of 
the  use  of  surplus  for  individual  and  social  growth.  But  where  a 
large  surplus  was  quite  evidently  absorbed  by  the  economic  force 
of  some  factor  whose  efficiency  it  hindered  rather  than  helped,  the 
state  would  apply  its  taxing  powers  rigorously  so  as  to  absorb 
this  wasted  surplus. 

Our  analysis  of  the  actual  working  of  the  industrial  system 
has  shown  the  emergence  of  large  quantities  of  waste  surplus.  It 
is  to  the  social  utilization  of  this  waste  surplus  that  the  taxing 
power  of  the  state  is  rightly  directed.  For  the  economic  rents,  the 
extra  profits,  interest,  salaries,  etc.,  which  are  got  by  the  use  of 
economic  force  in  creating  monopolies  or  artificial  scarcities,  are 
not  merely  failing  to  perform  the  true  functions  of  a  surplus,  as 
the  fund  of  progress,  in  stimulating  the  efficiency  of  factors  of 
production,  they  are  damaging  efficiency,  by  enabling  whole  classes 
of  persons  to  be  consumers  without  producing.  Such  injurious 
consumption  of  the  surplus  in  destroying  efficiency  it  is  the  evident 
duty  of  the  state  to  stop;  and  a  taxing  policy  which  transfers  such 
private  destruction  of  efficiency  into  the  means  of  a  public  increase  of 
efficiency  is  doubly  productive. 

Thus  the  true  policy  of  public  revenue  is  based  upon  the  duty 
of  the  state  to  take  as  public  income  whatever  portion  of  the 
surplus  is  not  already  allocated  to  the  stimulation  of  efficiency  of 
the  individual  factors  of  production,  but  is  taken  in  rents,  extra 
profits,  or  other  "unearned"  income.  .  .  . 

States  dominated  by  shortsighted  avarice  may  sometimes  attempt 
to  encroach  by  taxes  upon  the  subsistence  fund  of  labor  or  capital, 
or  at  least  to  annex  that  additional  payment  required  to  evoke  and 
to  support  progressive  efficiency  in  the  industrial  system.  This 
"sweating"  policy  has  frequently  been  practiced  by  despotic  rulers 
or  classes,  utilizing  the  powers  of  the  state  to  make  forced  levies  on 
the  resources  of  the  people. 

Such  an  abuse  of  taxing  power  in  its  operation  upon  agricul- 
ture has  probably  been  the  greatest  single  influence  throughout 
history  in  the  retardation  of  industry;  and  many  modern  civilized 
states,  by  mistaken  methods  of  taxation  which  assail  costs  of  pro- 
duction and  divert  the  factors  of  production  from  more  productive 
into  less  productive  channels,  inflict  upon  single  trades  or  upon 
the  national  industry  injuries  which  weaken  its  present  and  its 
future  yield  of  surplus,  so  diminishing  the  fund  of  public  revenue. 


THE  FUNDS  OF  REORGANIZATION  167 


4.    LABOR  AND  THE  NEW  SOCIAL  ORDER 

A  draft  report  on  Reconstruction  submitted  by  the 
Executive  Committee  of  the  British  Labor  Party 
at  the  nth  Annual  Conference,  Nottingham,  Jan, 
23-25,  1918 

It  behooves  the  Labor  party,  in  formulating  its  own  program 
for  reconstruction  after  the  war,  and  in  criticizing  the  various 
preparations  and  plans  that  are  being  made  by  the  present  govern- 
ment, to  look  at  the  problem  as  a  whole.  We  have  to  make  clear 
what  it  is  that  we  wish  to  construct.  It  is  important  to  emphasize 
the  fact  that,  whatever  may  be  the  case  with  regard  to  other 
political  parties,  our  detailed  practical  proposals  proceed  from  def- 
initely held  principles. 

THE  END  OF  A  CIVILIZATION 

We  need  to  beware  of  patchwork.  The  view  of  the  Labor  party 
is  that  what  has  to  be  reconstructed  after  the  war  is  not  this  or  that 
government  department,  or  this  or  that  piece  of  social  machinery; 
but,  so  far  as  Britain  is  concerned,  society  itself.  The  individual 
worker,  or  for  that  matter  the  individual  statesman,  immersed  in 
daily  routine — like  the  individual  soldier  in  a  battle — easily  fails 
to  understand  the  magnitude  and  far-reaching  importance  of  what 
is  taking  place  around  him.  How  does  it  fit  together  as  a  whole? 
How  does  it  look  from  a  distance?  Count  Okuma,  one  of  the 
oldest,  most  experienced  and  ablest  of  the  statesmen  of  Japan, 
watching  the  present  conflict  from  the  other  side  of  the  globe, 
declares  it  to  be  nothing  less  than  the  death  of  European  civilization. 
Just  as  in  the  past  the  civilization  of  Babylon,  Egypt,  Greece, 
Carthage  and  the  great  Roman  empire  have  been  successively 
destroyed,  so,  in  the  judgment  of  this  detached  observer,  the  civiliza- 
tion of  all  Europe  is  even  now  receiving  its  death  blow.  We  of 
the  Labor  party  can  so  far  agree  in  this  estimate  as  to  recognize, 
in  the  present  world  catastrophe,  if  not  the  death,  in  Europe,  of 
civilization  itself,  at  any  rate  the  culmination  and  collapse  of  a 
distinctive  industrial  civilization,  wKich  the~'wofk:ers~^witi"~no1r-seek- 
fo  reconstruct.  At  such  times  of  crisis  it  is  easiet  to  slip  into  fuiir 
than  tG"  progr&s  into  higher  forms  of  organization.  That  is  the 
problem  as  it  presents  itself  to  the  Labor  party. 

What  this  war  is  consuming  is  not  merely  the  security,  the 


1 68     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

homes,  the  livelihood  and  the  lives  of  millions  of  innocent  families, 
and  an  enormous  proportion  of  all  the  accumulated  wealth  of  the 
world,  but  also  the  very  basis  of  the  peculiar  social  order  in  which 
it  has  arisen.  The  individualist  system  of  capitalist  production, 
based  on  the  pnvalC  ounei'jhip  and  competilii^e  adminislfaiion  of— 
land  arid  capital,  with  its-^eekless  ''profiteering'^  -and  w^agc-slavery;- 
with  its  glorification  of  the  unhampered  Struggle  fui  LheTOeans-oi-Ufe^,, 
and  its  hgpgottical  pretenseTT  the  ^^survivai  "of  thelittest";  vaih 
the  monstrous  inequality  of  circumstances  which  it  produces  and 
the^degradation  and  brutallzation,  both  moral  and  spiritual,  result- 
lifiglEerefrom,  may,  we  hope,  indeed  have  received  a  death  blow. 
ith  it  must~go  the  pohtical  system  and  ideasln  which  it  naturally 
found  expression.  We  of  the  Labor  party,  whether  in  opposition  or 
in  due  time  called  upon  to  form  an  administration,  will  certainly 
lend  no  hand  to  its  revival.  On  the  contrary,  we  shall  do  our  utmost 
to  see  that  it  is  buried  with  the  millions  w^hom  it  has  done  to  death. 
If  we  in  Britain  are  to  escape  from  the  decay  of  civilization  itself, 
which  TheTapanese'stafeman'^toresees,  we  must  ensure  that  •y^TTalis 
presently  to  be  built  up  is  a  new  social  order,  based  not  on  fighting 
■Amt  on  fraternity — not  on  the  c6nipetitive~"strugg1er  f or  the  means 
"oT^are  life,  but  on  a  deliberately  planned  cooperation  in  production 
aH3^^[istributiQnribr  the  -^iiefif  of  IlIT  wSoIjiarHcrpate  byhand  or 
"bjT  brain — not  on  the  utmost  possible  inequality  of  riches7"bul  ^ 
on  a  systematic  ajjproaciTtowards  a  healthy  equauty  oi  material  cir- 
cumstances  for  every  person  born  into  the  w^orld — not  on  an  enforced 
dnmtnion  over  sub'iect  nations,  subject  races,  subject  colonies,  sub- 
ject  classes,  or  a  gjbject  sex,-but,-in-4iHiiistryLas  well^asjn  govefH^ 
ment,  on  that  equal  freedom,  that  general^ consciousness~orconsentJ 
and_that  widest  possible  partrcipatioiirih  power,  both  economic  and 
political,  which  is  characteristic  of  democragy^  We  do  not,  of  course, 
pretend  that  it  is  possible,  even  after  the  drastic  clearing  away  that 
is  now  going  on,  to  build  society  anew  in  a  year  or  two  of  feverish 
"reconstruction."  What  the  Labor  party  intends  to  satisfy  itself 
about  is  that  each  brick  that  it  helps  to  lay  shall  go  to  erect  the 
structure  that  it  intends,  and  no  other, 

THE   PILLARS    OF    THE   HOUSE 

We  need  not  here  recapitulate,  one  by  one,  the  different  items  in 
the  Labor  party's  program,  which  successive  party  conferences  have 
adopted.  These  proposals,  some  of  them  in  various  publications 
worked  out  in  practical  detail,  are  often  carelessly  derided  as  im- 
practicable, even  by  the  politicians  who  steal  them  piecemeal  from 
us!     The  members  of  the  Labor  party,  themselves  actually  working 


THE  FUNDS  OF  REORGANIZATION  169 

by  hand  or  by  brain,  in  close  contact  with  the  facts,  have  perhaps 
at  all  times  a  more  accurate  appreciation  of  what  is  practicable,  in 
industry  as  in  politics,  than  those  who  depend  solely  on  academic 
instruction  or  are  biased  by  great  possessions.  But  to-day  no  man 
dares  to  say  that  anything  is  impracticable.  The  war  which  has 
scared  the  old  political  parties  right  out  of  their  dogmas,  has  taught 
every  statesman  and  every  government  official,  to  his  enduring  sur- 
prise, how  very  much  more  can  be  done  along  the  lines  that  we  have 
laid  down  than  he  had  ever  before  thought  possible.  What  we  now 
promulgate  as  our  policy,  whether  for  opposition  or  for  office,  is 
not  merely  this  or  that  specific  reform,  but  a  deliberately  thought 
out,  system.atic,  and  comprehensive  plan  for  that  immediate  social 
rebuilding  which  any  ministry,  whether  or  not  it  desires  to  grapple 
with  the  problem,  will  be  driven  to  undertake.  The  four  pillars  of 
the  house  that  we  propose  to  erect,  resting  upon  the  common  foun- 
dation of  the  democratic  control  of  society  in  all  its  activities,  may 
be  termed: 

(a)  The  Universal  Enforcement  of  the  National  Minimum; 

(b)  The  Democratic  Control  of  Industry; 

(c)  The  Revolution  in  National  Finance;  and 

(d)  The  Surplus  Wealth  for  the  Common  Good. 


THE  UNIVERSAL  ENFORCEMENT  OF  A  NATIONAL  MINIMUM 

The  first  principle  of  the  Labor  party — in  significant  contrast 
with  those  of  the  capitalist  system,  whether  expressed  by  the  Lib- 
eral or  by  the  Conservative  party — is  the  securing  to  every  member 
of  the  community,  in  good  times  and  bad  alike  (and  not  only  to 
the  strong  and  able,  the  well  born  or  the  fortunate),  of  all  the 
requisites  of  healthy  life  and  worthy  citizenship.  This  is  in  no 
sense  a  ''class"  proposal.  Such  an  amount  of  social  protection  of 
the  individual,  however  poor  and  lowly,  from  birth  to  death,  is,  as 
the  economist  now  knows,  as  indispensable  to  fruitful  cooperation 
as  it  is  to  successful  combination;  and  it  affords  the  only  complete 
safeguard  against  that  insidious  degradation  of  the  standard^  of  life 
which  is_tJi£-jm3JSt  economic  and  RoriaL£alarnity  to  whichfany  com- 
mnnitv  ran  hp  fi^^h\pq\^(] .  We  are  members  one  of  another.  "No 
mafnTveth  to  himself  alone.  If  any,  even  the  humblest,  is  made 
to  suffer,  the  whole  community  and  every  one  of  us,  whether  or 
not  we  recognize  the  fact,  is  thereby  injured.  Generation  after 
generation  this  has  been  the  corner-stone  of  the  faith  of  Labor.  It 
will  be  the  guiding  principle  of  any  Labor  government. 


I70      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


The  Legislative  Regulation  of  Employment 

Thus  it  is  that  the  Labor  party  to-day  stands  for  the  universal 
application  of  the  policy  of  the  national  minimum,  to  which  (as 
embodied  in  the  successive  elaborations  of  the  Factory,  Mines, 
Railways,  Shops,  Merchant  Shipping,  and  Truck  acts,  the  Public 
Health,  Housing,  and  Education  acts  and  the  Minimum  Wage  act 
— all  of  them  aiming  at  the  enforcement  of  at  least  the  prescribed 
minimum  of  leisure,  health,  education,  and  subsistence)  the  spokes- 
"men  of  Labor  have  already  gained  the  support  of  the  enlightened 
statesmen  and  economists  of  the  world.  All  these  laws  purport- 
ing to  protect  against  extreme  degradation  of  the  standard  of  life 
need  considerable  improvement  and  extension,  whilst  their  ad- 
ministration leaves  much  to  be  desired.  For  instance,  the  Work- 
men's Compensation  act  fails  shamefully,  not  merely  to  secure 
proper  provision  for  all  the  victims  of  accident  and  industrial  dis- 
ease, but  what  is  much  more  important,  does  not  succeed  in  pre- 
venting their  continual  increase.  The  amendment  and  consolida- 
tion of  the  Factory  and  Workshops  acts,  with  their  extension  to 
all  employed  persons,  is  long  overdue,  and  it  will  be  the  policy  of 
Labor  greatly  to  strengthen  the  staff  of  inspectors,  especially  by 
the  addition  of  more  men  and  women  of  actual  experience  of  the 
workshop  and  the  mine.  The  Coal  Mines  (Minimum  Wage)  act 
must  certainly  be  maintained  in  force,  and  suitably  amended,  so 
as  both  to  insure  greater  uniformity  of  conditions  among  the  sev- 
eral districts,  and  to  make  the  district  minimum  in  all  cases  an 
effective  reality.  The  same  policy  will,  in  the  interests  of  the  agri- 
cultural laborers,  dictate  the  perpetuation  of  the  Legal  W^age  clauses 
of  the  new  Corn  law  just  passed  for  a  term  of  five  years,  and  the 
prompt  amendment  of  any  defects  that  may  be  revealed  in  their 
working.  And,  in  view  of  the  fact  that  many  millions  of  wage- 
earners,  notably  women  and  the  less  skilled  workmen  in  various 
occupations,  are  unable  by  combination  to  obtain  wages  adequate 
for  decent  maintenance  in  health,  the  Labor  party  intends  to  see 
to  it  that  the  Trade  Boards  act  is  suitably  amended  and  made  to 
apply  to  all  industrial  employments  in  which  any  considerable 
number  of  those  employed  obtain  less  than  30s.  per  week.  This 
minimum  of  not  less  than  30s.  per  week  (which  will  need  revision 
according  to  the  level  of  prices)  ought  to  be  the  very  lowest  statu- 
tory base  line  for  the  least  skilled  adult  workers,  men  or  women,  in 
any  occupation,  in  all  parts  of  the  United  Kingdom. 


THE  FUNDS  OF  REORGANIZATION  171 


The  Organization  of  Demobilization 

But  the  coming  industrial  dislocation,  which  will  inevitably 
follow  the  discharge  from  war  service  of  half  of  all  the  working 
population,  imposes  new  obligations  upon  the  community.  The 
demobilization  and  discharge  of  the  eight  million  wage-earners  now 
being  paid  from  public  funds,  either  for  service  with  the  colors  or 
in  munition  work  and  other  war  trades,  will  bring  to  the  whole  wage- 
earning  class  grave  peril  of  unemployment,  reduction  of  wages,  and 
a  lasting  degradation  of  the  standard  of  life,  which  can  be  pre- 
vented only  by  deliberate  national  organization.  The  Labor  party 
has  repeatedly  called  upon  the  present  government  to  formulate  its 
plan,  and  to  make  in  advance  all  arrangements  necessary  for  cop- 
ing with  so  unparalleled  a  dislocation.  The  policy  to  which  the 
Labor  party  commits  itself  is  unhesitating  and  uncompromising. 
It  is  plain  that  regard  should  be  had,  in  stopping  government  or- 
ders, reducing  the  staff  of  the  national  factories  and  demobilizing 
the  army,  to  the  actual  state  of  employment  in  particular  industries 
and  in  different  districts,  so  as  both  to  release  first  the  kinds  of 
labor  most  urgently  required  for  the  revival  of  peace  production, 
and  to  prevent  any  congestion  of  the  market.  It  is  no  less  impera- 
tive that  suitable  provision  against  being  turned  suddenly  adrift 
without  resources  should  be  made,  not  only  for  the  soldiers,  but 
also  for  the  three  million  operatives  in  munition  work  and  other 
war  trades,  who  will  be  discharged  long  before  most  of  the  army 
can  be  disbanded.  On  this  important  point,  which  is  the  most 
urgent  of  all,  the  present  government  has,  we  believe,  down  to  the 
present  hour,  formulated  no  plan,  and  come  to  no  decision,  and 
neither  the  Liberal  nor  the  Conservative  party  has  apparently 
deemed  the  matter  worthy  of  agitation.  Any  government  which 
should  allow  the  discharged  soldier  or  munition  worker  to  fall  into 
the  clutches  of  charity  or  the  Poor  law  would  have  to  be  instantly 
driven  from  office  by  an  outburst  of  popular  indignation.  WTiat 
every  one  of  them  will  look  for  is  a  situation  in  accordance  with 
his  capacity. 

Securing  Employment  for  All 

The  Labor  party  insists — as  no  other  political  party  has  thought 
fit  to  do — that  the  obligation  to  find  suitable  employment  in  pro- 
ductive work  for  all  these  men  and  women  rests  upon  the  govern- 
ment for  the  time  being.  The  work  of  re-settling  the  disbanded 
soldiers  and  discharged  munition  workers  into  new  situations  is  a 


172      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

national  obligation;  and  the  Labor  party  emphatically  protests 
against  its  being  regarded  as  a  matter  for  private  charity.  It 
strongly  objects  to  this  public  duty  being  handed  over  either  to  com- 
mittees of  philanthropists  or  benevolent  societies,  or  to  any  of  the 
military  or  recruiting  authorities.  The  policy  of  the  Labor  party 
in  this  matter  is  to  make  the  utmost  use  of  the  trade  unions,  and, 
equally  for  the  brainworkers,  of  the  various  professional  associa- 
tions. In  view  of  the  fact  that,  in  any  trade,  the  best  organization 
for  placing  men  in  situations  is  a  national  trade  union  having  local 
branches  throughout  the  kingdom,  every  soldier  should  be  allowed, 
if  he  chooses,  to  have  a  duplicate  of  his  industrial  discharge  notice 
sent,  one  month  before  the  date  fixed  for  his  discharge,  to  the  sec- 
retary of  the  trade  union  to  which  he  belongs  or  wishes  to  belong. 
Apart  from  this  use  of  the  trade  union  (and  a  corresponding  use 
of  the  professional  association)  the  government  must,  of  course, 
avail  itself  of  some  such  public  machinery  as  that  of  the  employ- 
ment exchanges;  but  before  the  existing  exchanges  (which  Vvill 
need  to  be  greatly  extended)  can  receive  the  cooperation  and  sup- 
port of  the  organized  Labor  movement,  without  which  their  oper- 
ations can  never  be  fully  successful,  it  is  imperative  that  they  ehould 
be  drastically  reformed,  on  the  lines  laid  down  in  the  Demobiliza- 
tion Report  of  the  ''Labor  After  the  War"  Joint  Committee;  and, 
in  particular,  that  each  exchange  should  be  placed  under  the  su- 
pervision and  control  of  a  joint  committee  of  employers  and  trade 
unionists  in  equal  numbers. 

The  responsibility  of  the  government,  for  the  time  being,  in  the 
grave  industrial  crisis  that  demobilization  will  produce,  goes,  how- 
ever, far  beyond  the  eight  million  men  and  women  whom  the  vari- 
ous departments  will  suddenly  discharge  from  their  own  service. 
The  effect  of  this  peremptory  discharge  on  all  the  other  workers 
has  also  to  be  taken  into  account.  To  the  Labor  party  it  will  seem 
the  supreme  concern  of  the  government  of  the  day  to  see  to  it  that 
there  shall  be,  as  a  result  of  the  gigantic  "General  Post"  which  it 
will  itself  have  deliberately  set  going,  nowhere  any  degradation  of 
the  standard  of  life.  The  government  has  pledged  itself  to  restore 
the  trade  union  conditions  and  "pre-war  practices"  of  the  work- 
shop, which  the  trade  unions  patriotically  gave  up  at  the  direct 
request  of  the  government  itself;  and  this  solemn  pledge  must  be 
fulfilled,  of  course,  in  the  spirit  as  well  as  in  the  letter.  The  Labor 
party,  moreover,  holds  it  to  be  the  duty  of  the  government  of  the 
day  to  take  all  necessary  steps  to  prevent  the  standard  rates  of 
wages,  in  any  trade  or  occupation  whatsoever,  from  suffering  any 
reduction,  relatively  to  the  contemporary  cost  of  living.  Unfortu- 
nately, the  present  government,  like  the  Liberal  and  Conservative 


THE  FUNDS  OF  REORGANIZATION  173 

parties,  so  far  refuses  to  speak  on  this  important  matter  with  any 
clear  voice.  We  claim  that  it  should  be  a  cardinal  point  of  gov- 
ernment policy  to  make  it  plain  to  every  capitalist  employer  that 
any  attempt  to  reduce  the  customaiy  rates  of  wages  when  peace 
comes,  or  to  take  advantage  of  the  dislocation  of  demobilization 
to  worsen  the  conditions  of  employment  in  any  grade  whatsoever, 
will  certainly  lead  to  embittered  industrial  strife,  which  will  be  in 
the  highest  degree  detrimental  to  the  national  interests;  and  that 
the  government  of  the  day  will  not  hesitate  to  take  all  necessary 
steps  to  avert  such  a  calamity.  In  the  great  impending  crisis  the 
government  of  the  day  should  not  only,  as  the  greatest  employer  of 
both  brainworkers  and  manual  workers,  set  a  good  example  in 
this  respect,  but  should  also  actively  seek  to  influence  private  em- 
ployers by  proclaiming  in  advance  that  it  will  not  itself  attempt  to 
lower  the  standard  rates  of  conditions  in  public  employment;  by 
announcing  that  it  will  insist  on  the  most  rigorous  observance  of 
the  fair  wages  clause  in  all  public  contracts,  and  by  explicitly  rec- 
ommending every  local  authority  to  adopt  the  same  policy. 

But  nothing  is  more  dangerous  to  the  standard  of  life,  or  so 
destructive  of  those  minimum  conditions  of  healthy  existence,  which 
must  in  the  interests  of  the  community  be  assured  to  every  worker, 
than  any  widespread  or  continued  unemployment.  It  has  always 
been  a  fundamental  principle  of  the  Labor  party  (a  point  on 
which,  significantly  enough,  it  has  not  been  followed  by  either  of 
the  other  pohtical  parties)  that,  in  a  modern  industrial  community, 
it  is  one  of  the  foremost  obligations  of  the  government  to  find,  for 
every  w^illing  worker,  whether  by  hand  or  by  brain,  productive  work 
at  standard  rates. 

It  is  accordingly  the  duty  of  the  government  to  adopt  a  policy 
of  deliberately  and  systematically  preventing  the  occurrence  of  un- 
employment, instead  of,  as  heretofore,  letting  unemployment  occur, 
and  then  seeking,  vainly  and  expensively,  to  relieve  the  unem- 
ployed. It  is  now  known  that  the  government  can,  if  it  chooses, 
arrange  the  public  works  and  the  orders  of  national  departments 
and  local  authorities  in  such  a  way  as  to  maintain  the  aggregate 
demand  for  labor  in  the  whole  kingdom  (including  that  of  cap- 
italist employers)  approximately  at  a  uniform  level  from  year  to 
year;  and  it  is  therefore  a  primary  obligation  of  the  government 
to  prevent  any  considerable  or  v/idespread  fluctuations  in  the  total 
numbers  em.ployed  in  times  of  good  or  bad  trade.  But  this  is  not 
all.  In  order  to  prepare  for  the  possibility  of  there  being  any  un- 
employment, either  in  the  course  of  demobilization  or  in  the  first 
years  of  peace,  it  is  essential  that  the  government  should  make  all 
necessary  preparations  for  putting  instantly  in  hand,  directly  or 


174      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

through  the  local  authorities,  such  urgently  needed  public  works 
as  (fl)  the  rehousing  of  the  population  alike  in  rural  districts,  min- 
ing villages,  and  town  slums,  to  the  extent,  possibly,  of  a  million 
new  cottages  and  an  outlay  of  three  hundred  millions  sterling;  {b) 
the  immediate  making  good  of  the  shortage  of  schools,  training 
colleges,  technical  colleges,  etc.,  and  the  engagement  of  the  neces- 
sary additional  teaching,  clerical,  and  administrative  staffs;  (c)  new 
roads;  (d)  light  railways;  (e)  the  unification  and  reorganization 
of  the  railway  and  canal  system;  (/)  afforestation;  (g)  the  recla- 
mation of  land;  (h)  the  development  and  better  equipment  of  our 
ports  and  harbors;  (i)  the  opening  up  of  access  to  land  by  cooper- 
ative small  holdings  and  in  other  practicable  ways.  Moreover,  in 
order  to  relieve  any  pressure  of  an  overstocked  labor  market,  the 
opportunity  should  be  taken,  if  unemployment  should  threaten  to 
become  widespread,  (a)  immediately  to  raise  the  school-leaving  age 
to  sixteen;  (6)  greatly  to  increase  the  number  of  scholarships  and 
bursaries  for  secondary  and  higher  education;  and  (c)  substan- 
tially to  shorten  the  hours  of  labor  of  all  young  persons,  even  to  a 
greater  extent  than  the  eight  hours  per  week  contemplated  in  the 
new  Education  bill,  in  order  to  enable  them  to  attend  technical  and 
other  classes  in  the  daytime.  Finally,  wherever  practicable,  the 
hours  of  adult  labor  should  be  reduced  to  not  more  than  forty-eight 
per  week,  without  reduction  of  the  standard  rates  of  wages.  There 
can  be  no  economic  or  other  justification  for  keeping  any  man  or 
woman  to  work  for  long  hours,  or  at  overtime,  whilst  others  are 
unemployed. 

Social  Insurance  against  Unemployment 

In  so  far  as  the  government  fails  to  prevent  unemployment — 
whenever  it  finds  it  impossible  to  discover  for  any  willing  worker, 
man  or  woman,  a  suitable  situation  at  the  standard  rate — the  Labor 
party  holds  that  the  government  must,  in  the  interest  of  the  com- 
munity as  a  whole,  provide  him  or  her  with  adequate  maintenance, 
either  with  such  arrangements  for  honorable  employment  or  with 
such  useful  training  as  may  be  found  practicable,  according  to  age, 
health  and  previous  occupation.  In  many  ways  the  best  form  of 
provision  for  those  who  must  be  unemployed,  because  the  industrial 
organization  of  the  community  so  far  breaks  down  as'  to  be  tempo- 
rarily unable  to  set  them  to  work,  is  the  Out  of  Work  Benefit  af- 
forded by  a  well-administered  trade  union.  This  is  a  special  tax 
on  the  trade  unionists  themselves  which  they  have  voluntarily  un- 
dertaken, but  towards  which  they  have  a  right  to  claim  a  public 
subvention — a  subvention  which  was  actually  granted  by  Parlia- 


THE  FUND?  OF  REORGANIZATION  175 

ment  (though  only  to  the  extent  of  a  couple  of  shillings  or  so  per 
week)  under  Part' II  of  the  Insurance  act. 

The  arbitrary  withdrawal  by  the  government  in  191 5  of  this 
statutory  right  of  the  trade  unions  was  one  of  the  least  excusable  of 
the  war  economies;  and  the  Labor  party  must  insist  on  the  resump- 
tion of  this  subvention  immediately  the  war  ceases,  and  on  its  in- 
crease to  at  least  half  the  amount  spent  in  Out  of  Work  Benefit. 
The  extension  of  state  unemployment  insurance  to  other  occupa- 
tions may  afford  a  convenient  method  of  providing  for  such  of  the 
unemployed,  especially  in  the  case  of  badly  paid  women  workers 
and  the  less  skilled  men,  whom  it  is  difficult  to  organize  in  trade 
unions.  But  the  weekly  rate  of  the  state  unemployment  benefit 
needs,  in  these  days  of  high  prices,  to  be  considerably  raised;  whilst 
no  industry  ought  to  be  compulsorily  brought  within  its  scope 
against  the  declared  will  of  the  workers  concerned,  and  especially 
of  their  trade  unions.  In  the  twentieth  century  there  must  be  no 
question  of  driving  the  unemployed  to  anything  so  obsolete  and 
discredited  as  either  private  charity,  with  its  haphazard  and  ill- 
considered  doles,  or  the  Poor  law,  with  the  futilities  and  barbarities 
of  its  "Stone  Yard,"  or  its  "Able-Bodied  Test  Workhouse."  Only 
on  the  basis  of  a  universal  application  of  the  Policy  of  the  National 
Minimum,  affording  complete  security  against  destitution,  in  sick- 
ness and  health,  in  good  times  and  bad  alike,  to  every  member  of 
the  community  can  any  worthy  social  order  be  built  up. 

THE  DEMOCRATIC   CONTROL   OF   INDUSTRY 

The  universal  application  of  the  policy  of  the  national  mini- 
mum is,  of  course,  only  the  first  of  the  pillars  of  the  house  that  the 
Labor  party  intends  to  see  built.  What  marks  off  this  party  most 
distinctly  from  any  of  the  other  political  parties  is  its  demand  for 
the  full  and  genuine  adoption  of  the  principle  of  democracy.  JQie 
first  condition  of  democracy  is  effective  personal  freedom.  This 
has  suffered  so  liiany  encroachrrrcnt3-tiurmg"TEe^ar  that  it  is  nec- 
essary to  state  with  clearness  that  the  complete  removal  of  all  the 
war-time  restrictions  on  freedom  of  speech,  freedom  of  publication, 
freedom  of  the  press,  freedom  of  travel  and  freedom  of  choice  of 
place  of  residence  and  kind  of  employment  must  take  place  the  day 
after  peace  is  declared.  The  Labor  party  declares  emphatically 
against  any  continuance  of  the  Military  Service  acts  a  moment 
longer  than  the  imperative  requirements  of  the  war  excuse.  But 
individual  freedom  is  of  little  use  without  complete  political  rights. 
The  Labor  party  sees  its  repeated  demands  largely  conceded  in  the 
present  Representation  of  the  People  act,  but  not  yet  wholly  satis- 


176      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

fied.  The  party  stands,  as  heretofore,  for  complete  adult  suffrage, 
with  not  more  than  a  three  months'  residential  qualification,  for 
effective  provision  for  absent  electors  to  vote,  for  absolutely  equal 
rights  for  both  sexes,  for  the  same  freedom  to  exercise  civic  rights 
for  the  "common  soldier"  as  for  the  officer,  for  shorter  Parliaments, 
for  the  complete  abolition  of  the  House  of  Lords,  and  for  a  most 
strenuous  opposition  to  any  new  Second  Chamber,  whether  elected 
or  not,  having  in  it  any  element  of  heredity  or  privilege,  or  of  the 
control  of  the  House  of  Commons  by  any  party  or  class.  But 
unlike  the  Conservative  and  Liberal  parties,  the  Labor  party  in- 
sists on  democracy  in  industry  as  well  as  in  government.  It  de- 
mands the  progressive  elimination  from  the  control  of  industry  of 
the  private  capitalist,  individual  or  joint-stock;  and  the  setting  free 
of  all  who  work,  whether  by  hand  or  by  brain,  for  the  service  of 
the  community,  and  of  the  community  only.  AELd_.the  Labor  party 
refuses  absolutely  to  believe  that  th^e  British  _pe^le  will  perma- 
neritIy~tolerate  any"recoMtrucT!m^  of  the  disorgan- 

ization,  waste_and  inefficiency  involved  in  the  abandonment  of 
3rrHsirin3^ustiyio~X"jo§tliiTg^xiwd^^^ 

with  thdOnindsZE^Z^T^pS^the. service  of  the  community,  but — •  _ 
by  Jhe^  very  law  of  their  bpjng — only ^oiijthe,  utmost  possible  Prof- 
iteering.     What  the  nation  needs  is  undoubtedly  a  great  bound' 
onward*in  its  aggregate  productivity.     But  this  cannot  be  secured 
merely  by  pressing  the  manual  workers  to  more  strenuous  toil,  or 
even  by  encouraging  the  "Captains  of  Industry"  to  a  less  wasteful 
organization  of  their  several  enterprises  on  a  profit-making  basis. 
AVVhat  the  Labor  party  looks  to  is  a  genuinely  scientific  reorganiza- 
'  tlon  of  the  nation^s  industry,  no  longer  deflecte^JsMridiviclual  proITT 
i^eringj_gn  the_basis_of^Jthe  common  ownership  of  the  means  of 
Droduction;   the  equitable  sharingJoT  tTi£prpceeds"~gllTOng  all  wM 
Darticipate  m  any  capaci'ty"and  only  among  these,  and  the  adoption, 
ripaniculairservices  and  occupations,  of  Lliuse  bj^cms  and^jiKitfeas^ 


>3s  of  administration  and  control  that  may  be  found,  in  practice, 
3est  to  promote~tEe~public  mtefest. 

Immediate  Nationalization 

The  Labor  party  stands  not  merely  for  the  principle  of  the  com- 
mon ownership  of  the  nation's  land,  to  be  applied  as  suitable  op- 
portunities occur,  but  also,  specifically,  for  the  immediate  nation- 
alization of  railways,  mines  and  the  production  of  electrical  power. 
We  hold  that  the  very  foundation  of  any  successful  reorganization 
of  British  industry  must  necessarily  be  found  in  the  provision  of 
the  utmost  faciUties  for  transport  and  communication,  the  produc- 


THE  FUNDS  OF  REORGANIZATION  177 

tion  of  power  at  the  cheapest  possible  rate  and  the  most  economi- 
cal supply  of  both  electrical  energy  and  coal  to  every  corner  of  the 
kingdom.  Hence  the  Labor  party  stands,  unhesitatingly,  for  the 
national  ownership  and  administration  of  the  railways  and  canals, 
and  their  union,  along  with  harbors  and  roads,  and  the  posts  and 
telegraphs — not  to  say  also  the  great  lines  of  steamers  which  could 
at  once  be  owned,  if  not  immediately  directly  managed  in  detail,  by 
the  government — in  a  united  national  service  of  communication  and 
transport;  to  be  worked,  unhampered  by  capitalist,  private  or 
purely  local  interests  (and  with  a  steadily  increasing  participation 
of  the  organized  workers  in  the  management,  both  central  and 
local),  exclusively  for  the  common  good.  If  any  government  should 
be  so  misguided  as  to  propose,  when  peace  comes,  to  hand  the  rail- 
ways back  to  the  shareholders;  or  should  show  itself  so  spendthrift 
of  the  nation's  property  as  to  give  these  shareholders  any  enlarged 
franchise  by  presenting  them  with  the  economies  of  unification  or 
the  profits  of  increased  railway  rates;  or  so  extravagant  as  to  be- 
stow public  funds  on  the  reequipment  of  privately  owned  lines — 
all  of  which  things  are  now  being  privately  intrigued  for  by  the 
railway  interests — the  Labor  party  will  offer  any  such  project  the 
most  strenuous  opposition.  The  railways  and  canals,  like  the  roads, 
must  henceforth  belong  to  the  public. 

In  the  production  of  electricity,  for  cheap  power,  light,  and 
heating,  this  country  has  so  far  failed,  because  of  hampering  private 
interests,  to  take  advantage  of  science.  Even  in  the  largest  cities 
we  still  "peddle"  our  electricity  on  a  contemptibly  small  scale. 
WTiat  is  called  for  immediately  after  the  war  is  the  erection  of  a 
score  of  gigantic  "super-power  stations,"  which  could  generate,  at 
incredibly  cheap  rates,  enough  electricity  for  the  use  of  every  in- 
dustrial establishment  and  every  private  household  in  Great  Brit- 
ain; the  present  municipal  and  joint-stock  electrical  plants  being 
universally  linked  up  and  used  for  local  distribution.  This  is  in- 
evitably the  future  of  electricity.  It  is  plain  that  so  great  and  so 
powerful  an  enterprise,  affecting  every  industrial  enterprise  and, 
eventually,  every  household,  must  not  be  allowed  to  pass  into  the 
hands  of  private  capitalists.  They  are  already  pressing  the  gov- 
ernment for  the  concession,  and  neither  the  Liberal  nor  the  Con- 
servative party  has  yet  made  up  its  mind  to  a  refusal  of  such  a 
new  endowment  of  profiteering  in  what  will  presently  be  the  life 
blood  of  modern  productive  industry.  The  Labor  party  demands 
that  the  production  of  electricity  on  the  necessary  gigantic  scale 
shall  be  made,  from  the  start  (with  suitable  arrangements  for  mu- 
nicipal cooperation  in  local  distribution),  a  national  enterprise,  to 


178      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

be  worked  exclusively  with  the  object  of  supplying  the  whole  king- 
dom with  the  cheapest  possible  power,  light  and  heat. 

But  with  railways  and  the  generation  of  electricity  in  the  hands 
of  the  public,  it  would  be  criminal  folly  to  leave  to  the  present 
one  thousand  five  hundred  colliery  companies  the  power  of  ''hold- 
ing up"  the  coal  supply.  These  are  now  all  working  under  public 
control,  on  terms  that  virtually  afford  to  their  shareholders  a 
statutory  guarantee  of  their  swollen  incomes.  The  Labor  party 
demands  the  immediate  nationalization  of  mines,  the  extraction  of 
coal  and  iron  being  worked  as  a  public  service  (with  a  steadily  in- 
creasing participation  in  the  management,  both  central  and  local, 
of  the  various  grades  of  persons  employed) ;  and  the  whole  business 
of  the  retail  distribution  of  household  coal  being  undertaken,  as  a 
local  public  service,  by  the  elected  municipal  or  county  councils. 
And  there  is  no  reason  why  coal  should  fluctuate  in  price  any  more 
than  railway  fares,  or  why  the  consumer  should  be  made  to  pay 
more  in  winter  than  in  summer,  or  in  one  town  than  another. 
What  the  Labor  party  would  aim  at  is,  for  household  coal  of  stand- 
ard quality,  a  fixed  and  uniform  price  for  the  whole  kingdom,  pay- 
able by  rich  and  poor  alike,  as  unalterable  as  the  penny  postage 
stamp. 

But  the  sphere  of  immediate  nationalization  is  not  restricted  to 
these  great  industries.  We  shall  never  succeed  in  putting  the  gi- 
gantic system  of  health  insurance  on  a  proper  footing,  or  secure  a 
clear  field  for  the  beneficent  work  of  the  Friendly  Societies,  or  gain 
a  free  hand  for  the  necessary  development  of  the  urgently  called 
for  Ministry  of  Health  and  the  Local  Public  Health  Service,  until 
the  nation  expropriates  the  profit-making  industrial  insurance  com- 
panies, which  now  so  tyrannously  exploit  the  people  with  their 
wasteful  house-to-house  industrial  life  assurance.  Only  by  such  an 
expropriation  of  life  assurance  companies  can  we  secure  the  uni- 
versal provision,  free  from  the  burdensome  toll  of  weekly  pence,  of 
the  indispensable  funeral  benefit.  Nor  is  it  in  any  sense  a  "class" 
measure.  Only  by  the  assumption  by  a  state  department  of  the 
whole  business  of  life  assurance  can  the  millions  of  policy-holders 
of  all  classes  be  completely  protected  against  the  possibly  calami- 
tous results  of  the  depreciation  of  securities  and  suspension  of 
bonuses  which  the  war  is  causing.  Only  by  this  means  can  the 
great  staff  of  insurance  agents  find  their  proper  place  as  civil  serv- 
ants, with  equitable  conditions  of  employment,  compensation  for 
any  disturbance  and  security  of  tenure,  in  a  nationally  organized 
public  service  for  the  discharge  of  the  steadily  increasing  functions 
of  the  government  in  vital  statistics  and  social  insurance. 

In  quite  another  sphere  the  Labor  party  sees  the  key  to  tem- 


THE  FUNDS  OF  REORGANIZATION  179 

perance  reform  in  taking  the  entire  manufacture  and  retailing  of 
alcoholic  drink  out  of  the  hands  of  those  who  find  profit  in  pro- 
moting the  utmost  possible  consumption.  This  is  essentially  a  case 
in  which  the  people,  as  a  whole,  must  deal  with  the  licensing  ques- 
tion in  accordance  with  local  opinion.  For  this  purpose,  localities 
should  have  conferred  upon  them  facilities:  (c)  To  prohibit  the 
sale  of  liquor  within  their  boundaries;  (b)  To  reduce  the  number 
of  licenses  and  regulate  the  conditions  under  which  they  may  be 
held;  and  (c)  If  a  locality  decides  that  licenses  are  to  be  granted, 
to  determine  whether  such  licenses  shall  be  under  private  or  any 
form  of  public  control. 

Other  main  industries,  especially  those  now  becoming  monopo- 
lized, should  be  nationalized  as  opportunity  offers.  Moreover,  the 
Labor  party  holds  that  the  municipalities  should  not  confine  their 
activities  to  the  necessarily  costly  services  of  education,  sanitation 
and  police;  nor  yet  rest  content  with  acquiring  control  of  the  local 
water,  gas,  electricity  and  tramways;  but  that  every  facility  should 
be  afforded  to  them  to  acquire  (easily,  quickly  and  cheaply)  all  the 
land  they  require,  and  to  extend  their  enterprises  in  housing  and 
town  planning,  parks,  and  public  libraries,  the  provision  of  music 
and  the  organization  of  recreation;  and  also  to  undertake,  besides 
the  retailing  of  coal,  other  services  of  common  utility,  particularly 
the  local  supply  of  milk,  wherever  this  is  not  already  fully  organ- 
ized by  a  cooperative  society. 

Control  of  Capitalist  Industry 

Meanwhile,  however,  we  ought  not  to  throw  away  the  valuable 
experience  now  gained  by  the  government  in  its  assumption  of  the 
importation  of  wheat,  wool,  metals,  and  other  commodities,  and  in 
its  control  of  the  shipping,  woolen,  leather,  clothing,  boot  and  shoe, 
milling,  baking,  butchering,  and  other  industries.  The  Labor  party 
holds  that,  whatever  may  have  been  the  shortcomings  of  this  gov- 
ernment importation  and  control,  it  has  demonstrably  prevented  a 
lot  of  "profiteering."  Nor  can  it  end  immediately  on  the  declara- 
tion of  peace.  The  people  will  be  extremely  foolish  if  they  everj 
allow  their  indispensable  industries  to  slip  back  into  the  unfettered 
control  of  private  capitalists,  who  are,  actually  at  the  instance  of 
the  government  itself,  now  rapidly  combining,  trade  by  trade,  into 
monopolist  trusts,  which  may  presently  become  as  ruthless  in  their 
extortion  as  the  worst  American  examples.  Standing  as  it  does  for 
the  democratic  control  of  industry,  the  Labor  party  would  think 
twice  before  it  sanctioned  any  abandonment  of  the  present  profit- 
able centralization  of  purchase  of  raw  material;  of  the  present  care^ 


i8o     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

fully  organized  ''rationing,"  by  joint  committees  of  the  trades  con- 
cerned, of  the  several  establishments  with  the  materials  they  require; 
of  the  present  elaborate  system  of  "costing"  and  public  audit  of 
manufacturers'  accounts,  so  as  to  stop  the  waste  heretofore  caused 
by  the  mechanical  inefficiency  of  the  more  backward  firms;  of  the 
present  salutary  publicity  of  manufacturing  processes  and  expenses 
thereby  insured;  and,  on  the  information  thus  obtained  (in  order 
never  again  to  revert  to  the  old-time  profiteering)  of  the  present 
rigid  fixing,  for  standardized  products,  of  maximum  prices  at  the 
factory,  at  the  warehouse  of  the  wholesale  trader  and  in  the  retail 
shop.  This  question  of  the  retail  prices  of  household  commodities 
is  emphatically  the  most  practical  of  all  political  issues  to  the  woman 
elector.  The  male  politicians  have  to&  long  neglected  the  griev- 
ances of  the  small  household,  which  is  the  prey  of  every  profiteering 
combination;  and  neither  the  Liberal  nor  the  Conservative  party 
promises,  in  this  respect,  any  amendment.  This,  too,  is  in  no  sense 
a  "class"  measure.  It  is,  so  the  Labor  party  holds,  just  as  much 
the  function  of  government,  and  just  as  necessary  a  part  of  the 
democratic  regulation  of  industry,  to  safeguard  the  interests  of  the 
community  as  a  whole,  and  those  of  all  grades  and  sections  of  pri- 
vate consumers,  in  the  matter  of  prices,  as  it  is,  by  the  Factory  and 
Trade  Boards  acts,  to  protect  the  rights  of  the  wage-earning  pro- 
ducers in  the  matter  of  wages,  hours  of  labor  and  sanitation. 

A  REVOLUTION  IN   NATIONAL   FINANCE 

In  taxation,  also,  the  interests  of  the  professional  and  house- 
keeping classes  are  at  one  with  those  of  the  manual  workers.  Too 
long  has  our  national  finance  been  regulated,  contrary  to  the  teach- 
ing of  political  economy,  according  to  the  wishes  of  the  possessing 
classes  and  the  profits  of  the  financiers.  The  colossal  expenditure 
involved  in  the  present  war  (of  which,  against  the  protest  of  the 
Labor  party,  only  a  quarter  has  been  raised  by  taxation,  whilst 
three-quarters  have  been  borrowed  at  onerous  rates  of  interest,  to 
be  a  burden  on  the  nation's  future)  brings  things  to  a  crisis.  When , 
peace  comes,  capital  will  be  needed  for  all  sorts  of  social  enter- 
prises, and  the  resources  of  government  will  necessarily  have  to  be 
vastly  greater  than  they  were  before  the  war.  Meanwhile  innu- 
merable new  private  fortunes  are  being  heaped  up  by  those  who 
have  taken  advantage  of  the  nation's  needs;  and  the  one- tenth  of 
the  population  which  owns  nine-tenths  of  the  riches  of  the  United 
Kingdom,  far  from  being  made  poorer,  will  find  itself,  in  the  ag- 
gregate, as  a  result  of  the  war,  drawing  in  rent  and  interest  and 
dividends  a  larger  nominal  income  than  ever  before.     Such  a  posi- 


THE  FUNDS  OF  REORGANIZATION  i8i 

tion  demands  a  revolution  in  national  finance.  How  are  we  to 
discharge  a  public  debt  that  may  well  reach  the  almost  incredible 
figure  of  seven  thousand  million  pounds  sterling,  and  at  the  same 
time  raise  an  annual  revenue  which,  for  local  as  well  as  central 
government,  must  probably  reach  one  thousand  millions  a  year? 
It  is  over  this  problem  of  taxation  that  the  various  political  parties 
will  be  found  to  be  most  sharply  divided. 

The  Labor  party  stands  for  such  a  system  of  taxation  as  will 
yield  all  the  necessary  revenue  to  the  government  without  encroach- 
ing on  the  prescribed  national  minimum  standard  of  life  of  any 
family  whatsoever;  without  hampering  production  or  discouraging 
any  useful  personal  effort,  and  with  the  nearest  possible  approxima- 
tion to  equality  of  sacrifice.  We  definitely  repudiate  all  proposals 
for  a  protective  tariff,  in  whatever  specious  guise  they  may  be 
cloaked,  as  a  device  for  burdening  the  consumer  with  unnecessarily 
enhanced  prices,  to  the  profit  of  the  capitalist  employer  or  landed 
proprietor,  who  avowedly  expects  his  profit  or  rent  to  be  increased 
thereby.  We  shall  strenuously  oppose  any  taxation,  of  whatever 
kind,  which  would  increase  the  price  of  food  or  of  any  other  neces- 
sary of  life.  We  hold  that  indirect  taxation  on  commodities,  whether 
by  customs  or  excise,  should  be  strictly  limited  to  luxuries;  and 
concentrated  principally  on  those  of  which  it  is  socially  desirable 
that  the  consumption  should  be  actually  discouraged.  We  are  at  one 
with  the  manufacturer,  the  farmer,  and  the  trader  in  objecting  to 
taxes  interfering  with  production  or  commerce,  or  hampering  trans- 
port and  communications.  In  all  these  matters — once  more  in  con- 
trast with  the  other  political  parties,  and  by  no  means  in  the 
interests  of  the  wage-earners  alone — the  Labor  party  demands  that 
the  very  definite  teachings  of  economic  science  should  no  longer  be 
disregarded  as  they  have  been  in  the  past. 

For  the  raising  of  the  greater  part  of  the  revenue  now  required 
the  Labor  party  looks  to  the  direct  taxation  of  the  incomes  above 
the  necessary  cost  of  family  maintenance;  and,  for  the  requisite 
effort  to  pay  off  the  national  debt,  to  the  direct  taxation  of  private 
fortunes  both  during  life  and  at  death.  The  income  tax  and  super- 
tax ought  at  once  to  be  thoroughly  reformed  in  assessment  and 
collection,  in  abatements  and  allowances  and  in  graduation  and 
differentiation,  so  as  to  levy  the  required  total  sum  in  such  a  way 
as  to  make  the  real  sacrifice  of  all  the  tax-payers  as  nearly  as 
possible  equal.  This  would  involve  assessment  by  families  instead 
of  by  individual  persons,  so  that  the  burden  is  alleviated  in  propor- 
tion to  the  number  of  persons  to  be  maintained.  It  would  involve 
the  raising  of  the  present  unduly  low  minimum  income  assessable 
to  the  tax,  and  the  lightening  of  the  present  unfair  burden  on 


i82      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  great  mass  of  professional  and  small  trading  classes  by  a  new 
scale  of  graduation,  rising  from  a  penny  in  the  pound  on  the  smallest 
assessable  income  up  to  sixteen  or  even  nineteen  shillings  in  the  pound 
on  the  highest  income  of  the  millionaires.  It  would  involve  bring- 
ing into  assessment  the  numerous  windfalls  of  profit  that  now  escape,, 
and  a  further  differentiation  between  essentially  different  kinds  of 
income.  The  excess  profits  tax  might  well  be  retained  in  an  ap- 
propriate form,  whilst,  so  long  as  mining  royalties  exist,  the  mineral 
rights  duty  ought  to  he  increased.  The  steadily  rising  unearned  in- 
crement of  urban  and  mineral  land  ought,  by  an  appropriate  direct 
taxation  of  land  values,  to  be  wholly  brought  into  the  public  ex- 
chequer. At  the  same  time,  for  the  service  and  redemption  of  the 
national  debt,  the  death  duties  ought  to  be  regraduated,  much  more 
strictly  collected,  and  greatly  increased.  In  this  matter  we  need, 
in  fact,  completely  to  reverse  our  point  of  view,  and  to  rearrange 
the  whole  taxation  of  inheritance  from  the  standpoint  of  asking 
what  is  the  maximum  amount  that  any  rich  man  should  be  permitted 
at  death  to  divert,  by  his  will,  from  the  national  exchequer,  which 
should  normally  be  the  heir  to  all  private  riches  in  excess  of  a  quite 
moderate  amount  by  way  of  family  provision.  But  all  this  will  not 
suffice.  It  will  be  imperative  at  the  earliest  possible  moment  to  free 
the  nation  from  at  any  rate  the  greater  part  of  its  new  load  of 
interest  bearing  debt  for  loans  which  ought  to  have  been  levied  as 
taxation;  and  the  Labor  party  stands  for  a  special  capital  levy  to 
pay  off,  if  not  the  whole,  a  very  substantial  part  of  the  entire 
national  debt — a  capital  levy  chargeable  like  the  death  duties  on  all 
property,  but  (in  order  to  secure  approximate  equality  of  sacrifice) 
with  exemption  of  the  smallest  savings,  and  for  the  rest  at  rates 
very  steeply  graduated,  so  as  to  take  only  a  small  contribution  from 
the  little  people  and  a  very  much  larger  percentage  from  the  mil- 
lionaires. 

Over  this  issue  of  how  the  financial  burden  of  the  war  is  to  be 
borne,  and  how  the  necessary  revenue  is  to  be  raised,  the  greatest 
political  battles  will  be  fought.  In  this  matter  the  Labor  party 
claims  the  support  of  four-fifths  of  the  whole  nation,  for  the  inter- 
ests of  the  clerk,  the  teacher,  the  doctor,  the  minister  of  religion, 
the  average  retail  shopkeeper  and  trader,  and  all  the  mass  of  those 
living  on  small  incomes  are  identical  with  those  of  the  artisan.  The 
landlords,  the  financial  magnates,  the  possessors  of  great  fortunes 
will  not,  as  a  class,  willingly  forego  the  relative  immunity  that  they 
have  hitherto  enjoyed.  The  present  unfair  subjection  of  the  co- 
operative society  to  an  excess  profits  tax  on  the  "profits"  which  it 
has  never  made — specially  dangerous  as  "the  thin  end  of  the 
wedge"  of  penal  taxation  of  this  laudable  form  of  democratic  enter- 


THE  FUNDS  OF  REORGANIZATION  183 

prise — will  not  be  abandoned  without  a  struggle.  Every  possible 
effort  will  be  made  to  juggle  with  the  taxes,  so  as  to  place  upon  the 
shoulders  of  the  mass  of  laboring  folk  and  upon  the  struggling  house- 
holds of  the  professional  men  and  small  traders  (as  was  done  after 
every  previous  war) — whether  by  customs  or  excise  duties,  by  in- 
dustrial monopolies,  by  unnecessarily  high  rates  of  postage  and 
railway  fares,  or  by  a  thousand  and  one  other  ingenious  devices^ 
an  unfair  share  of  the  national  burden.  Against  these  efforts  the 
Labor  party  will  take  the  firmest  stand. 

THE   SURPLUS   FOR  THE   COMMON   GOOD 

In  the  disposal  of  the  surplus  above  the  standard  of  life  society 
has  hitherto  gone  as  far  wrong  as  in  its  neglect  to  secure  the 
necessary  basis  of  any  genuine  industrial  efficiency  or  decent  social 
order.  We  have  allowed  the  riches  of  our  mines,  the  rental  value 
of  the  lands  superior  to  the  margin  of  cultivation,  the  extra  profits 
of  the  fortunate  capitalists,  even  the  material  outcome  of  scientific 
discoveries — which  ought  by  now  to  have  made  this  Britain  of  ours 
immune  from  class  poverty  or  from  any  widespread  destitution — to 
be  absorbed  by  individual  proprietors;  and  then  devoted  very  large- 
ly to  thp^^jfp^pjp^c;  1iix]jry__pf  an  idle  rich  class.^  Against  this  mis- 
appropriation of  the  wealth  of  iEe  community,  the  Labor  party — 
speaking  in  the  interests  not  of  the  wage-earners  alone,  but  of  every 
grade  and  section  of  producers  by  hand  or  by  brain,  not  to  men- 
tion also  those  of  the  generations  that  are  to  succeed  us,  and  of  the 
permanent  welfare  of  the  community — emphatically  protests.  One 
main  pillar  of  the  house  that  the  Labor  party  intends  to  build  is  the 
future  appropriation  of  the  surplus,  not  to  the  enlargement  of  any 
individual  fortuneJilOS^^ffiEL-CQmmbhgood.  It  is  from  this  con- 
stantly arising  surplus  (to  be  secured,  on  tTie~one  hand,  by  nation- 
alization and  municipalization  and,  on  the  other,  by  the  steeply 
graduated  taxation  of  private  income  and  riches)  that  will  have  to 
be  found  the  new  capital  which  the  community  day  by  day  needs 
for  the  perpetual  improvement  and  increase  of  its  various  enterprises, 
for  which  we  shall  decline  to  be  dependent  on  the  usury  exacting 
financiers.  It  is  from  the  same  source  that  has  to  be  defrayed  the 
public  provision  for  the  sick  and  infirm  of  all  kinds  (including  that 
for  maternity  and  infancy)  which  is  still  so  scandalously  insufficient; 
for  the  aged  and  those  permaturely  incapacitated  by  accident  or 
disease,  now  in  many  ways  so  imperfectly  cared  for;  for  the  educa- 
tion alike  of  children,  of  adolescents  and  of  adults,  in  which  the 
Labor  party  demands  a  genuine  equality  of  opportunity  overcoming 
all  differences  of  material  circumstances;  and  for  the  organization 


i84      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  public  improvements  of  all  kinds,  including  the  brightening  of 
the  lives  of  those  now  condemned  to  almost  ceaseless  toil,  and  a  great 
development  of  the  means  of  recreation.  From  the  same  source  must 
come  the  greatly  increased  public  provision  that  the  Labor  party- 
will  insist  on  being  made  for  scientific  investigation  and  original 
research,  in  every  branch  of  knowledge,  not  to  say  also  for  the  pro- 
motion of  music,  literature  and  fine  art,  which  have  been  under 
capitalism  so  greatly  neglected,  and  upon  which,  so  the  Labor  party 
holds,  any  real  development  of  civilization  fundamentally  depends. 
Society,  like  the  individual,  does  not  live  by  bread  alone — does  not 
exist  only  for  perpetual  wealth  production.  It  is  in  the  proposal 
for  this  appropriation  of  every  surplus  for  the  common  good — in  the 
vision  of  its  resolute  use  for  the  building  up  of  tlie  community  as  a 
whole  instead  of  for  the  magnification  of' individual  fortunes — that 
the  Labor  party,  as  the  party  of  the  producers  by  hand  or  by 
brain,  most  distinctively  marks  itself  off  from  the  older  political 
parties,  standing,  as  these  do,  essentially  for  the  maintenance,  un- 
impaired, of  the  perpetual  private  mortgage  upon  the  annual  product 
of  the  nation  that  is  involved  in  the  individual  ownership  of  land 
and  capital. 

THE    STREET    OF    TO-MOKROW 

The  house  which  the  Labor  party  intends  to  build,  the  four 
pillars  of  which  have  now  been  described,  does  not  stand  alone  in 
the  world.  WTiere  will  it  be  in  the  street  of  to-morrow?  If  we 
repudiate,  on  the  one  hand,  the  imperialism  that  seeks  to  dominate 
other  races,  or  to  impose  our  own  will  on  other  parts  of  the  British 
empire,  so  we  disclaim  equally  any  conception  of  a  selfish  and  insular 
"non-interventionism,"  unregarding  of  our  special  obligations  to  our 
fellow-citizens  overseas;  of  the  corporate  duties  of  one  nation  to 
another;  of  the  moral  claims  upon  us  of  the  non-aduit  races,  and  of 
our  own  indebtedness  to  the  world  of  which  we  are  part.  We  look 
for  an  ever-increasing  intercourse,  a  constantly  developing  exchange 
of  com.modities.  a  continually  expanding  friendly  cooperation  among 
all  the  peoples' of  the  world.  With  regard  to  that  great  common- 
wealth of  all  races,  all  colors,  all  religions  and  all  degrees  of 
civilization,  that  we  call  the  British  empire,  the  Labor  party  stands 
for  its  maintenance  and  its  progressive  development  on  the  lines 
of  local  autonomy  and  "Home  Rule  All  Round";  the  fullest  respect 
for  the  rights  of  each  people,  whatever  its  color,  to  all  the  democratic 
self-government  of  which  it  is  capable,  and  to  the  proceeds  of  its 
own  toil  upon  the  resources  of  its  own  territorial  home;  and  the 
closest  possible  cooperation  among  all  the  various  members  of  what 


THE  FUNDS  OF  REORGANIZATION  185 

has  become  essentially  not  an  empire  in  the  old  sense,  but  a  Bri- 
tannic alliance. 

We  desire  to  maintain  the  most  intimate  relations  with  the  Labor 
parties  overseas.  Like  them,  we  have  no  sympathy  with  the  projects 
of  "Imperial  Federation,"  in  so  far  as  these  imply  the  subjection 
to  a  common  imperial  legislature  wielding  coercive  power  (including 
dangerous  facilities  for  coercive  imperial  taxation  and  for  enforced 
military  service),  either  of  the  existing  self-government  Dominions, 
whose  autonomy  would  be  thereby  invaded;  or  of  the  United 
Kingdom,  whose  freedom  of  democratic  self-development  would  be 
thereby  hampered;  or  of  India  and  the  colonial  dependencies,  which 
would  thereby  run  the  risk  of  being  further  exploited  for  the  benefit 
of  a  "WTiite  Empire."  We  do  not  intend  by  any  such  "Imperial 
Senate,"  either  to  bring  the  plutocracy  of  Canada  and  South  Africa 
to  the  aid  of  the  British  aristocracy,  or  to  enable  the  landlords 
and  financiers  of  the  mother  country  to  unite  in  controlling  the  grow- 
ing popular  democracies  overseas.  The  autonomy  of  each  self- 
governing  part  of  the  empire  must  be  intact. 

What  we  look  for,  besides  a  constant  progress  in  democratic  self- 
government  of  every  part  of  the  Britannic  alliance,  and  especially  in 
India,  is  a  continuous  participation  of  the  ministers  of  the  Do- 
minions, of  India,  and  eventually  of  other  dependencies  (perhaps  by 
means  of  their  own  ministers  specially  resident  in  London  for  this 
purpose)  in  the  most  confidential  deliberations  of  the  Cabinet,  so 
far  as  foreign  policy  and  imperial  affairs  are  concerned;  and  the 
annual  assembly  of  an  Imperial  Council,  representing  all  constit- 
uents of  the  Britannic  alliance  and  all  parties  in  their  local  legis- 
latures, which  should  discuss  all  matters  of  common  interest,  but 
only  in  order  to  make  recommendations  for  the  simultaneous  con- 
sideration of  the  various  autonomous  local  legislatures  of  what  should 
increasingly  take  the  constitutional  form  of  an  alliance  of  free  na- 
tions. And  we  carry  the  idea  further.  As  regards  our  relations  to 
foreign  countries,  we  disavow  and  disclaim  any  desire  or  intention 
to  dispossess  or  to  impoverish  any  other  state  or  nation.  We  seek 
no  increase  of  territory.  We  disclaim  all  idea  of  "economic  war." 
We  ourselves  object  to  all  protective  customs  tariffs;  but  we  hold 
that  each  nation  must  be  left  free  to  do  v;hat  it  thinks  best  for  its 
o^vn  economic  development  without  thought  of  injuring  others.  We 
believe  that  nations  are  in  no  way  damaged  by  each  other's  economic 
prosperity  or  commercial  progress;  but,  on  the  contrary,  that  they 
are  actually  themselves  mutually  enriched  thereby.  We  would 
therefore  put  an  end  to  the  old  entanglements  and  mystifica- 
tions of  secret  diplomacy  and  the  formation  of  leagues  against 
leagues. 


1 86      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

We  stand  for  the  immediate  establishment,  actually  as  a  part  of 
the  treaty  of  peace  with  which  the  present  war  will  end,  of  a  uni- 
versal league  or  society  of  nations,  a  supernational  authority,  with 
an  international  high  court  to  try  all  justiciable  issues  between  na- 
tions; an  international  legislature  to  enact  such  common  laws  as 
can  be  mutually  agreed  upon,  and  an  international  council  of  media- 
tion to  endeavor  to  settle  without  ultimate  conflict  even  those  dis- 
putes which  are  not  justiciable.  We  would  have  all  the  nations  of 
the  world  most  solemnly  undertake  and  promise  to  make  common 
cause  against  any  one  of  them  that  broke  away  from  this  funda- 
mental agreement.  The  world  has  suffered  too  much  from  war  for 
the  Labor  party  to  have  any  other  policy  than  that  of  lasting 
peace. 

MORE   LIGHT — BUT   ALSO   MORE   WARMTH 

The  Labor  party  is  far  from  assuming  that  it  possesses  a  key  to 
open  all  locks;  or  that  any  policy  which  it  can  formulate  will  solve 
all  the  problems  that  beset  us.  But  we  deem  it  important  to  our- 
selves as  well  as  to  those  who  may,  on  the  one  hand,  wish  to 
join  the  part}'^,  or,  on  the  other,  to  take  up  arms  against  it,  to  make 
quite  clear  and  definite  our  aim  and  purpose.  The  Labor  party 
wants  that  aim  and  purpose,  as  set  forth  in  the  preceding  pages, 
with  all  its  might.  It  calls  for  more  warmth  in  politics,  for  much 
less  apathetic  acquiescence  in  the  miseries  that  exist,  for  none  of  the 
cynicism  that  saps  the  life  of  leisure.  On  the  other  hand,  the  Labor 
party  has  no  belief  in  any  of  the  problems  of  the  world  being  solved 
by  good  will  alone.  Good  will  without  knowledge  is  warmth  without 
light.  Especially  in  all  the  complexities  of  politics,  in  the  still  un- 
developed science  of  society,  the  Labor  party  stands  for  increased 
study,  for  the  scientific  investigation  of  each  succeeding  problem, 
for  the  deliberate  organization  of  research,  and  for  a  much  more 
rapid  dissemination  among  the  whole  people  of  all  the  science  that 
exists.  And  it  is  perhaps  specially  the  Labor  party  that  has  the 
duty  of  placing  this  advancement  of  science  in  the  forefront  of  its 
political  program.  What  the  Labor  party  stands  for  in  all  fields 
of  life  is,  essentially,  democratic  cooperation;  and  cooperation  in- 
volves a  common  purpose  which  can  be  agreed  to;  a  common  plan 
which  can  be  explained  and  discussed,  and  such  a  measure  of  success 
in  the  adaptation  of  means  to  ends  as  will  ensure  a  common  satis- 
faction. An  autocratic  sultan  may  govern  without  science  if  his 
whim  is  law.  A  plutocratic  party  may  choose  to  ignore  science,  if 
it  is  heedless  whether  its  pretended  solutions  of  social  problems  that 
may  win  political  triumphs  ultimately  succeed  or  fail.    But  no  Labor 


THE  FUNDS  OF  REORGANIZATION  187 

party  can  hope  to  maintain  its  position  unless  its  proposals  are, 
in  fact,  the  outcome  of  the  best  political  science  of  its  time;  or  to 
fulfil  its  purpose  unless  that  science  is  continually  wresting  new  fields 
from  human  ignorance.  Hence,  although  the  purpose  of  the  Labor 
party  must,  by  the  law  of  its  being,  remain  for  all  time  unchanged, 
its  policy  and  its  program  will,  we  hope,  undergo  a  perpetual  de- 
velopment, as  knowledge  grows,  and  as  new  phases  of  the  social 
problem  present  themselves,  in  a  continually  finer  adjustment  of  our 
measures  to  our  ends.  If  law  is  the  mother  of  freedom,  science,  to 
the  Labor  party,  must  be  the  parent  of  law. 

Meyer  Bloomfield:  Management  and  Men*  (p.  207) 

Summing  up  the  labor  viewpoint  and  situation  in  Great  Britain 
I  should  say  that  the  outstanding  event  that  will  make  the  year 
19 1 9  a  landmark  in  these  matters  is  the  definite  emergence  of  the 
Labor  Party  as  the  government's  chief  alternative  and  opposition 
party.  It  is  the  old  labor  party  enlarged  and  definitely  recon- 
stituted. 

About  a  year  ago  the  party  constitution  was  changed  in  order 
to  strengthen  the  membership  and  give  it  greater  weight  in  public 
life.  One  innovation  was  the  formal  recognition  of  the  interest  of 
"all  producers  by  hand  or  brain."  Unlike  Bolshevists,  the  Labor 
Party  does  not  regard  the  industrial  organizer,  specialist  and  man- 
ager as  anathema.  He  is  an  indispensable  factor  in  production, 
unless,  as  in  Russia,  industry  is  to  be  reduced  to  primitive  condi- 
tions of  barter.  It  is  of  interest  to  note  that  lately  Lenine  has  been 
pleading  with  his  coadjutors  to  entice  the  fugitive  employers  and 
managers  back  by  most  extravagant  sums  of  money,  in  order  to 
resurrect  the  dead  industries  of  his  country. 

The  present  leaders  of  the  Labor  Party  are  clear  headed,  patri- 
otic men,  with  experience  in  building  up  and  with  a  keen  industrial 
sense.  Backed  by  the  strong  Trades-Union  Congress,  which  re- 
centty  signalized  its  fiftieth  birthday  by  sending  a  message  of  con- 
gratulations to  the  Forces,  the  prospects  on  which  the  majority  of 
the  labor  forces  base  their  hopes  are  good.  It  is  not  conceivable 
that  the  present  government  will  disappoint  these  hopes. 

Signs  point  to  a  far-reaching  program  of  national  reforms  on 
which  labor,  government  and  thinking  employers  will  unite.  The 
keynote  is:  "Make  Britain  a  good  country  to  live  in;  its  industries 
fit  places  to  work  in." 

*  Reprinted  by  permission  of  The  Century  Co. 


CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


Final  Report  on  Joint  Industnal  Councils,  Great 

Britain  * 

.  .  .  We  have  presented  four  reports.  In  our  first  report  on 
joint  industrial  councils  (Cd.  8606)  we  recommend  the  establish- 
ment for  each  of  the  principal  well-organized  industries  of  a  triple 
form  of  organization,  representative  of  employers  and  employed,  con- 
sisting of  joint  industrial  councils,  joint  district  councils,  and  works 
committees,  each  of  the  three  forms  of  organization  being  linJced  up 
vdth  the  others  so  as  to  constitute  an  organization  covering  the 
whole  of  the  trade,  capable  of  considering  and  advising  upon  matters 
affecting  the  welfare  of  the  industr}'-,  and  giving  to  labor  a  definite 
and  enlarged  share  in  the  discussion  and  settlement  of  industrial 
matters  with  which  employers  and  employed  are  jointly  con- 
cerned. 

In  our  second  report  on  joint  industrial  councils  (Cd.  9002)  we 
proposed  for  trades  where  organization  is  at  present  very  weak  or 
non-existent  an  adaptation  and  expansion  of  the  system  of  trade 
boards  working  under  an  amended  trades  board  act;  and  for  trades 
in  which  organization  is  considerable,  but  not  yet  general,  a  system 
of  joint  councils  with  some  Government  assistance  which  may  be 
dispensed  with  as  these  industries  advance  to  the  stage  dealt  with  in 
our  first  report. 

In  the  second  report  we  proposed  also  a  plan  whereby  the 
joint  council  of  an  industry,  when  it  has  agreed  upon  a  minimum 
standard  of  working  conditions  for  those  employed  in  the  industry, 
may  have  the  means  of  making  those  conditions  general  in  any 
district  or  over  the  whole  country. 

Taking  our  first  and  second  reports  together  they  constitute 
a  scheme  designed  to  cover  all  the  chief  industries  of  the  country 
and  to  equip  each  of  them  with  a  representative  joint  body  capable 
of  dealing  with  matters  affecting  the  welfare  of  the  industry  in  which 
employers  and  employed  are  concerned  and  of  caring  for  the  pro- 
gressive improvement  of  the  industry  as  an  integral  part  of  the 
national  prosperity. 

We  have  considered  it  no  less  important  that  in  each  factory  or 
workshop,  where  the  circumstances  of  the  industry  permit,  and  when 
the  conditions  which  we  have  stated  are  fulfilled,  there  should  be 
a  works  committee,  representative  of  the  management  and  the  men 
and  women  employed,  meeting  regularly  to  consider  questions  pecu- 
liar to  the  individual  factory  or  workshop,  which  affect  the  daily  life 
and  comfort  of  the  workers  and  in  no  small  degree  the  efficiency 
*From  Monthly  Labor  Review,  December,  1918,  pp.  31-4. 


THE  FUNDS  OF  REORGANIZATION  189 

of  the  work,  and  in  which  practical  experience  will  bring  a  valuable 
contribution  to  the  improvement  of  methods.  This  question  was  the 
subject  of  our  third  report.  (Cd.  9085.) 

We  wish  to  reaffirm  our  conviction,  expressed  in  the  first  report, 
of  the  urgency  of  the  matter.  In  our  opinion  there  is  pressing  need 
that  every  organized  industry  should  equip  itself  with  a  representa- 
tive machinery  capable  of  dealing  with  the  large  questions  of  com- 
mon interest  to  employers  and  employed  arising  in  war  time,  during 
demobilization,  and  in  the  period  after  the  war.  Further,  we 
believe  that  when  the  joint  councils  have  gained  confidence  and 
experience  in  dealing  with  the  urgent  problems  of  the  moment  they 
will  find  their  sphere  of  usefulness  to  be  much  wider  than  they  them- 
selves imagined  at  their  first  inception. 

Similarly,  works  committees,  beginning  perhaps  with  limited 
functions,  will,  we  anticipate,  without  in  any  way  trenching  upon 
matters  appropriate  to  the  industrial  councils,  find  a  continual 
growth  in  the  list  of  questions  appertaining  to  the  individual  factory 
or  workshop  that  can  be  dealt  with  by  mutual  agreement.    .   .   . 

NOTE 

By  attaching  our  signatures  to  the  general  reports  we  desire 
to  render  hearty  support  to  the  recommendations  that  industrial 
councils  or  trade  boards,  according  to  whichever  are  the  more  suitable 
in  the  circumstances,  should  be  established  for  the  several  indus- 
tries or  businesses  and  that  these  bodies,  representative  of  employees 
and  employed,  should  concern  themselves  with  the  establishment  of 
minimum  conditions  and  the  furtherance  of  the  common  interests 
of  their  trades. 

But  while  recognizing  that  the  more  amicable  relations  thus  es- 
tablished between  capital  and  labor  will  afford  an  atmosphere  gener- 
ally favorable  to  industrial  peace  and  progress,  we  desire  to  express 
our  view  that  a  complete  identity  of  interests  between  capital  and 
labor  can  not  be  thus  effected,  and  that  such  machinery  can  not  be 
expected  to  furnish  a  settlement  for  the  more  serious  conflicts  of 
interest  involved  in  the  working  of  an  economic  system  primarily 
governed  and  directed  by  motives  of  private  profit. 

J.  R.  Clynes. 

J.    A.    HOBSON. 

A.   Susan  Lawrence. 
J.  J.   Mallon. 
MoNA  Wilson. 


190      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


Report  of  the  Employers  Industrial  Commission  to 
Great  Britain  * 

To  Hon,  Roger  W.  Babson, 

Director   General  Injormation   and  Education   Service, 

United  States  Department  of  Labor,  Washington,  D.  C: 
In  conclusion,  we  submit  the  following  findings: 

1.  Employers  in  Great  Britain  generally  recognize  the  desira- 
bility of  bargaining  collectively  with  labor. 

2.  Employers  nearly  all  agree  that  collective  bargaining  should 
always  be  undertaken  between  associations  of  employers  and  the 
regularly   established   well-organized   trade-unions. 

While  many  manufacturers  welcome  organizations  of  workmen 
in  their  factories  (shop  or  works  committees),  they  want  to  limit 
the  activities  of  such  bodies  to  purely  local  grievances,  and  decidedly 
desire  that  the  committee  members  come  under  the  discipline  of 
their  unions. 

3.  Most  employers  freely  recognize  the  right  of  labor  to  organize; 
they  regard  organization  as  greatly  contributing  to  the  stability  of 
industry.  Some  large  manufacturers  declare  that  they  wish  to  see 
every  workman  within  the  unions,  so  that  they  must  all  come  under 
organization  control.  Others  feel  that  100  per  cent  organization 
might  lead  to  dangerous  types  of  universal  strikes  and  lockouts. 
The  more  conservative  employers  appear  to  make  no  effort  to  help 
along  organizations  of  labor,  merely  dealing  with  such  organiza- 
tions when  they  appear  on  the  scene. 

4.  Employees  in  Great  Britain  are  divided  in  sentiment  shad- 
ing from  those  who  want  to  maintain  the  trade-unions  along  the 
regularly  established  so-called  "constitutional"  lines  to  ultraradical 
socialists. 

5.  Employees  are  nearly  a  unit,  however,  in  expressing  opposi- 
tion to  the  use  of  force.  The  most  radical  who  desire  "now"  a  com- 
plete overturning  of  the  present  social  structure,  usually  admit  on 
close  questioning  that  "now"  may  mean  many  years.  They  want  to 
"start"  now.  Practically  none  appear  to  approve  of  a  sudden  change 
as  in  Russia. 

6.  Employees  of  the  ultraradical  type  look  askance  at  collective 
bargaining  and  organizations  of  labor  and  capital.  They  freely  ex- 
press the  view  that  they  do  not  wish  harmony  between  employees  and 
employers,  since  harmony  would  help  to  continue  the  present  system 
of  society. 

7.  Employees  of  the  more  conservative  type  (and  to  your  commis- 
*  United  States  Department  of  Labor,  April  27,  1919. 


THE  FUNDS  OF  REORGANIZATION  191 

sioners  they  appear  to  represent  the  vast  majority  of  British  work- 
men) are  largely  in  accord  with  employers  in  the  desire  (i)  to  head 
off  labor  unrest  at  this  period;  (2)  to  strengthen  the  unions  by 
holding  members  under  control;  (3)  to  increase  production  for  the 
sake  of  the  nation,  workmen  included — with  no  restriction  on  out- 
put except  as  it  affects  the  health  of  the  worker;  (4)  to  leave 
control  of  business  policies  in  the  hands  of  those  managing  the 
business. 

8.  Government  officials  appear  to  be  uniformly  of  the  opinion 
that  the  Government  should  function  in  labor  unrest  only  as  an 
absolutely  last  unavoidable  resort.  On  the  other  hand,  they  main- 
tain the  right  of  the  Government  to  step  in  when  necessary  in  order 
to  protect  public  interests  against  minorities  which  try  to  force  their 
terms  upon  the  people. 

9.  In  general  the  Government,  and  most  employers  and  conserv- 
vative  employees  appear  to  be  agreed: 

That  the  spirit  of  cooperation  between  labor  and  capital  is 
highly  desirable. 

That  the  spirit  of  conciliation  is  important  for  the  benefit  of 
the  employer  in  stabilizing  his  business  and  for  the  benefit  of  the 
em.ployee  in  preserving  his  regularly  organized  unions. 

That  in  collective  bargaining  the  right-minded  employer  will  not 
attempt  to  return  to  the  pre-war  industrial  era,  and  that  the  right- 
minded  employee  will  not  attempt  to  crowd  his  demands  to  the 
point  at  which  the  stimulus  for  private  business  enterprise  would  dis- 
appear. 

The  spirit  of  a  genuinely  better  new  (and  not  novel)  era  is  thus 
being  fostered  by  widely  varied  elements  of  Great  Britain's  industrial 
system. 

R.  J.  Caldwell, 
Dorr  E.  Felt, 
Wm.  H.  Ingersoll, 
RoBT.  R.  Otis. 

and 
E.  T.   GuNDLACH,  Chairman. 
The  personnel  of  the  commission  is  as  follows: 
Mr.  E.  T.  Gundlach,  chairman,  is  connected  with  advertising, 
publishing,  and  industrial  interests  in  Chicago. 

Mr.  R.  J.  Caldwell  is  president  and  owner  of  cotton  mills  in 
Connecticut  and  elsewhere, 

Mr.  Dorr  E.  Felt  is  a  manufacturer  of  adding  machines  in 
Chicago;  he  has  been  and  is  now  president  of  the  Illinois  Manu- 
facturers' Association. 


192      CURRENT  SOCI.\L  AND  INDUSTRIAL  FORCES 

Mr.  Eldon  B.  Keith,  deceased,  was  a  shoe  manufacturer  of 
Brockton,  Mass. 

Mr.  William  H.  Ingersoll  is  a  watch  manufacturer  in  New  York. 

Mr.  R.  R.  Otis,  for  the  last  five  years  president  of  the  Real 
Estate  Board  of  Atlanta,  Ga.,  is  identified  with  the  building  busi- 
ness in  the  South, 

Dr.  Royal  Meeker,  who  accompanied  the  commission  as  economic 
adviser,  is  Commissioner  of  Labor  Statistics,  Washington,  D.  C. 

Mr.  B.  M.  Squires,  the  commission's  statistician,  is  chairman 
of  the  Board  of  Arbitration  of  the  United  States  Shipping  Board, 
New  York  City. 

Messrs.  James  R.  Hawkins,  George  E.  Macllwain,  Edgar  N. 
Phillips,  and  John  A.  Witt  accompanied  the  commission  in  fiscal 
and  secretarial  capacities. 

Ordway  Tead:  Criticism  of  the  Whitley  Report  * 

There  are,  I  believe,  several  criticisms  to  be  made  of  the  idea 
as  the  Whitley  Report  states  it ;  and  as  it  is  being  initially  attempted. 

There  is,  first,  no  recognition  of  an  active  public  interest  in  the 
deliberations  of  the  Council.  Only  two  of  the  parties  are  given 
voice — the  employer  and  the  worker.  Neither  the  direct  consumer 
nor  the  general  community  interest  is  represented.  If  the  idea  of 
representation  of  divergent  interests  is  to  be  applied,  it  should  be 
consistently  applied;  and  not  leave  the  important  consumers'  and 
the  public's  regulative  interests  ignored  and  without  voice.  If 
adjustment  is  to  be  reached  by  securing  a  balance  of  forces — by 
securing  a  tem^porary  equilibrium  of  opposed  interests — the  likeli- 
hood of  a  stable  and  equitable  adjustment  is  greatest  when  every 
possibly  disturbing  factor,  every  vital  interest,  is  allowed  free 
expression  and  consideration.  There  is  the  danger,  as  the  Fabians 
point  out,  "of  exploitation  of  the  community  by  combinations  of  a 
trust  character  whose  objects  might  include  the  forcing  up  of  prices." 

Second,  there  is  not — perhaps  there  could  not  be  in  a  body  of 
basic  laws — any  explicit  recognition  that  standards  of  a  "fair"  day's 
work  and  a  "fair"  day's  pay  are  necessarily  progressive  and  not 
static  standards.  Needless  misunderstanding  and  ill  will  arise  in 
industry  through  the  present  failure  of  one  side  or  the  other  to  see 
that  "reasonableness,"  "just  compensation,"  and  "efScient  work- 
manship" are  concepts  as  relative  as  the  term  "nearness"  when 
applied  to  the  stars.  Industrial  constitutions  will  be  in  danger  of 
annihilation  if  employers,  for  example,  do  not  realize  that  the 
workers'  dem.ands  are  not  necessarily  going  to  stop  at  some  fixed 
*  Reprinted  by  permission  of  the  Nezv  Republic,  February  8,  1919- 


THE  FUNDS  OF  REORGANIZATION  193 

point.  Their  desire  for  shorter  hours,  higher  earnings,  better  shop 
conditions,  for  more  voice  in  controlling  price  and  output,  promises 
to  assert  itself  for  some  time;  and  if  in  that  situation  the  time 
arrives  when  to  satisfy  the  claims  of  the  head  and  hand  workers 
there  must  come  a  shift  in  the  proportion  of  the  total  income  which 
goes  to  capital  holders,  it  must  be  understood  that  vve  are  facing 
a  fluid,  transitional  economic  era.  Either  the  workers  of  the  head 
and  hand  will  assume  fuller  and  fuller  control  of  industry  by  the 
orderly  means  which  these  Councils  provide;  or  they  will  get  it  in 
some  other  way.  And  I  do  not  get  the  sense,  in  reading  the  Whitley 
document,  of  any  adequate  appreciation  by  its  authors  that  the 
present  underlying  basis  of  relationship  between  employers  and 
workers  with  the  present  private  ownership  of  capital,  and  the 
present  direction  of  productive  energies  by  the  holders  of  credit,  is 
itself  extremely  unstable  and  on  its  way  to  changes  not  clearly  seen 
by  any  of  us. 

In  the  third  place,  as  the  English  radicals  of  the  left  have  pointed 
out,  the  Council  scheme  definitely  fails  to  include  the  purchase 
and  allocation  of  raw  materials  as  one  of  the  matters  for  joint  deter- 
mination. As  an  immediate  proposition,  that  omission  is  probably 
politic  and  discreet.  But  no  one  can  watch  the  increasing  role  which 
transportation,  coal,  iron,  food,  cotton,  wool,  copper,  hides  and 
rubber — to  mention  only  some  of  the  most  obvious  commodities — ■ 
play  in  international  affairs  and  in  industrial  destinies,  without 
getting  an  uncomfortable  sense  that  to  consider  industrial  relations 
without  considering  where  the  raw  material  is  coming  from,  how 
much  it  costs,  where  it  is  going  and  what  use  is  to  be  made  of 
it,  is  like  trying  to  solve  an  equation  in  which  a  majority  of  the 
factors  are  unknown.  Sooner  or  later — and  sooner  rather  than 
later  if  the  League  of  Nations  ventures  to  exert  control  over  any 
economic  matters — there  will  come  from  the  workers  an  irresistible 
demand  to  be  admitted  to  deliberations  w^here  decisions  affecting 
raw  materials  are  being  made.  And  with  that  slight  but  far  reaching 
addition  to  the  statement  of  joint  powers  will  come  an  accumulation 
of  responsibility  and  power  for  the  Council  which  will  raise  it  to  a 
place  of  determining  influence  in  industry.  When  jurisdiction  does 
extend  to  raw  materials,  we  can  begin  to  envisage  a  gradual  and 
necessary  coming  together  of  Councils  into  what  v»dll  eventually  be 
a  complete  National  Industrial  Parliament.  Under  this  increased 
coordination  it  will  be  possible  to  achieve  a  really  scientific  control 
of  production  in  the  public  interest — a  control  for  the  purpose  of 
assuring  that  the  real  demand  shall  be  supplied,  no  more  and  no  less, 
and  that  the  supply  shall  be  of  honest  goods,  well  made  and  sensibly 
distributed. 


194      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

But  such  considerations  carry  us  farther  afield  than  it  is  yet 
necessary  or  possible  to  go.  If  I  have  indicated  the  rise  and  growth 
of  a  significant  economic  tendency  and  suggested  how  by  the  use 
of  intelligent  control  the  tendency  can  be  made  more  fully  amen- 
able to  human  purposes,  it  is  sufficient.  The  National  Industrial 
Council  stands,  I  believe,  as  a  substantial  milestone  on  the  way 
toward  a  real,  organic,  inclusive  industrial  democracy.  Its  defects 
are  only  the  defects  of  its  virtues — virtues  of  immediate  availability. 
As  an  educational  and  cohesive  force  in  the  world  of  economic  affairs 
it  is  unquestionably  the  most  important  departure  since  the  Rochdale 
weavers  gave  the  world  the  cooperative  movement.    .    .    , 

"shop  committee" 

But  the  ambitious  and  inquiring  shop  committee  will  not  stop 
there  [with  profits].  As  soon  as  workers  realize  that  they  do  have 
a  voice  in  determining  the  conditions  of  the  factory  with  which  their 
livelihood  is  tied  up,  they  will  see  new  points  of  attack.  They 
will  want  low  unit  costs.  When  that  point  is  reached  the  game  is 
up,  from  the  point  of  view  of  autonomous  shop  control.  Problems 
of  research  into  process,  introduction  of  new  machinery  with  the 
maintenance  of  wages  as  high  for  machine  feeders  as  for  replaced 
craftsmen,  training-in  of  new  workers,  the  price  of  the  raw  material, 
the  effectiveness  of  the  sales  organization,  and  economy  in  securing 
credit — these  are  a  far  cry  from  a  modest  proposal  of  departmental 
representation  on  a  joint  shop  board  which  is  to  discuss  "grievances." 
But  these  are  the  very  matters  which  determine  low  unit  costs. 
The  day  is  gone  when  the  workers  or  anyone  else  will  submit  to 
wage  reductions  in  order  to  lower  costs.  That  is  a  lazy  and  in- 
competent way  to  attempt  economies.  It  will  not  be  the  way 
adopted  in  any  plant  where  the  shop  committee  is  a  living  force. 

Managers  of  individual  plants  have  been  slow  to  recognize  the 
value  of  action  on  an  industry-wide  basis.  In  the  old  days,  every 
manager's  hand  was  against  his  neighbor's.  But  the  logic  of 
economic  necessity  will  force  his  workers  to  look  beyond  the  factory 
fence  to  understand  why  it  is  that  wages  are  low,  profits  fluctuating, 
work  irregular  and  costs  high.  In  that  effort  to  orient  itself  which 
a  shop  committee  with  any  power  must  inevitably  make,  it  will  have 
sooner  or  later  to  see  that  its  shop  succeeds  or  fails  not  as  a  unit 
but  as  a  part  of  a  larger  unit — which  is  the  industry.  These  larger 
problems  may  to-day  come  to  an  apparently  satisfactory  settlement 
in  one  shop.  But  eventually  the  pressure  of  competition,  domestic 
and  foreign,  and  the  demands  of  the  workers  for  status,  will  enforce 
more  uniform  action  throughout  an  entire  industry.    In  that  hour 


THE  FUNDS  OF  REORGANIZATION  195 

not  simply  the  desirability  but  the  necessity  of  industry-wide  or- 
ganization on  the  side  of  both  employers  and  workers,  will  be  real- 
ized. And  we  shall  see  the  need  for  an  organization  of  workers 
with  industry-wide  affiliations  no  less  than  for  the  shop  committee. 

In  short,  if  only  we  would  view  industry  in  terms  of  the  several 
functions  to  be  performed,  there  would  arise  less  opposition  both 
from  employers  and  from  unions  to  organized  provision  for  the  per- 
formance of  those  functions.  We  see  two  functions  in  question  here. 
There  is  need  of  the  shop  committee  to  open  up  channels  of  direct, 
personal  communication  between  managers  and  managed.  A  per- 
sonal human  contact  must  be  reestablished.  A  vivid  sense  of 
participation  in  a  common  and  socially  valuable  enterprise  must  be 
realized  if  the  shop  is  to  have  an  atmosphere  of  good  will  and  work- 
manship— and  without  this  atmosphere  maximum  efficiency  is  not  ob- 
tainable. Likewise,  there  is  valuable  training  in  joint  action  and  in 
decentralized  responsibility.  Committee  action,  especially  where  dif- 
ferent interests  are  represented,  is  inevitably  educational.  The  shop 
committee  can  thus  be  the  cradle  of  industrial  democracy  as  the  town 
meeting  was  of  political  democracy. 

But  genuine  industrial  democracy  will  never  get  beyond  cradle 
dimensions  until  the  important  issues  are  determined  on  a  wider  and 
wider  scale,  until  finally  on  matters  like  hours,  price  of  raw  ma- 
terials, and  protective  legislation,  decisions  are  reached  in  the  eco- 
nomic bodies  of  the  League  of  Nations  and  accepted  by  the  world. 
This  is  the  second  function — this  determination  of  the  basic  terms 
of  industrial  life.  And  only  temporarily  can  the  shop  committee 
assume  it. 

Employers,  especially  those  who  are  fearful  of  union  encroach- 
ments and  attempts  of  ''agitators  to  run  my  business,"  must  under- 
stand, then,  that  in  their  plans  of  employees'  representation  they  are 
not  merely  creating  an  organ  of  orderly  adjustment  and  amicable 
cooperation.  They  are  giving  play  to  impulses  of  self-direction, 
leadership  and  assertiveness  in  their  workers,  which  will  not  stop 
at  some  point  which  the  employer  has  arbitrarily  set  in  his  own 
mind.  They  are  creating  machinery  in  the  operation  of  which  the 
workers  will  inevitably  come  to  see  how  closely  their  destinies  are 
linked  up  with  problems  of  tariffs,  sources  of  raw  material,  unit 
costs  of  production  and  all  the  other  elements.  They  are  showing 
the  workers  that  if  an  equality  of  bargaining  power  does  not  exist 
within  one  plant  much  can  be  done  to  remedy  the  inequality  by 
affiliation  with  workers  in  other  plants  in  the  same  industry. 

Constitutionalism  in  industry  is  about  to  involve  precisely  what 
it  has  involved  in  political  affairs — a  hierarchy  of  representative 
bodies,  each  concerned  with  the  problems  which  the  size  and  char- 


196      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

acter  of  its  administrative  unit  requires.  In  this  scheme  of  things 
the  shop  committee  will  necessarily  have  a  significant  place, — a 
place  at  the  base  of  the  pyramid  which  culminates  in  joint  national 
industrial  councils  and  in  international  labor  commissions.  It  can- 
not permanently  be  an  instrument  to  thwart  labor  organization  or 
to  entrench  the  employer  more  fully  in  ultimate  authority.  The 
shop  committee  can  and  should,  on  the  contrary,  perform  one  in- 
estimably valuable  and  immediate  function.  It  should  contribute 
to  the  building  up  of  a  spirit  of  mutual  understanding  and  personal 
confidences  strong  enough  to  make  the  transition  to  bargaining  with 
labor  unions  a  normal  and  a  natural  transition  in  which  all  values 
are  retained  and  others  added. 


VI.    THE  POWER  AND  POLICY  OF  ORGANIZED  LABOR 


I.    DIRECT  ACTION 

Bertrand  Russell:  Democracy  and  Direct  Action"^ 

The  battle  for  political  democracy  has  been  won:  white  men 
everywhere  are  to  live  under  the  regime  of  parliamentary  govern- 
ment. Russia,  which  for  the  present  is  trying  a  new  form  of  con- 
stitution, will  probably  be  led  by  internal  or  external  pressure  to 
adopt  the  system  favored  by  the  Western  Powers. 

But  even  before  this  contest  was  decided  a  new  one  was  seen  to 
be  beginning.  The  form  of  government  in  the  United  States,  Britain, 
and  France  is  a  capitalistic  or  plutocratic  democracy.  The  democ- 
racy which  exists  in  the  political  sphere  finds  no  counterpart  in  the 
economic  world.  The  struggle  for  economic  democracy  seems  likely 
to  dominate  politics  for  many  years  to  come.  The  Russian  govern- 
ment, which  cares  nothing  for  the  forms  of  political  democracy, 
stands  for  a  very  extreme  form  of  economic  democracy,  a  strong  and 
apparently  growing  party  in  Germany  has  similar  aims.  Of  opinion 
in  France  I  know  nothing,  but  in  this  country  the  workers  who  de- 
sire to  obtain  control  of  industries  subject  to  state  ownership,  though 
not  sufficiently  strong  numerically  to  have  much  influence  on  the 
personnel  of  Parliament,  are  nevertheless  able  through  organization 
in  key  industries  to  exert  a  powerful  pressure  on  the  government  and 
to  cause  fear  of  industrial  upheavals  to  become  widespread  through- 
out the  middle  and  upper  classes.  We  have  thus  the  spectacle  of 
opposition  between  a  new,  democratically-elected  Parliament  and 
the  sections  of  the  nation  which  consider  themselves  the  most  dem- 
ocratic. In  such  circumstances  many  friends  of  democracy  become 
bewildered  and  grow  perplexed  as  to  the  aims  they  ought  to  pursue 
or  the  party  with  which  they  ought  to  sympathize. 

The  time  was  when  the  idea  of  parliamentary  government  in- 
spired enthusiasm,  but  that  time  is  past.  Already  before  the  war 
legislation  had  come  to  be  more  and  more  determined  by  contests 
between  interests  outside  the  legislature,  bringing  pressure  to  bear 
directly  upon  the  government.  This  tendency  has  been  much  ac- 
celerated. The  view  which  prevails  in  the  ranks  of  organized  labor 
— and  not  only  there — is  that  Parliament  exists  merely  to  give 
effect  to  the  decision  of  the  government,  while  those  decisions 
*  Reprinted  by  permission  of  The  Dial,  May  3,  1919. 

199 


200      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

themselves,  so  far  from  representing  any  settled  policy,  embody  noth- 
ing but  the  momentary  balance  of  forces  and  the  compromise  most 
likely  to  secure  temporary  peace.  The  weapon  of  labor  in  these 
contests  is  no  longer  the  vote,  but  the  threat  of  a  strike — -"direct 
action."  It  was  the  leaders  of  the  Confederation  Generale  du  Tra- 
vail during  the  twenty  years  preceding  the  war  who  first  developed 
this  theory  of  the  best  tactics  for  labor.  But  it  is  experience  rather 
than  theory  that  has  led  to  its  widespread  adoption — the  experience 
largely  of  the  untrustworthiness  of  parliamentary  Socialist  leaders 
and  of  the  reactionary  social  forces  to  v/hich  they  are  exposed. 

To  the  traditional  doctrine  of  democracy  there  is  something  re- 
pugnant in  this  whole  method.  Put  crudely  and  nakedly,  the  posi- 
tion is  this:  the  organized  workers  in  a  key  industry  can  inflict  so 
much  hardship  upon  the  community  by  a  strike  that  the  community 
is  willing  to  yield  to  their  demands  things  which  it  would  never  yield 
except  under  the  threat  of  force.  This  may  be  represented  as  the 
substitution  of  the  private  force  of  a  minority  in  place  of  law  as 
embodying  the  will  of  the  majority.  On  this  basis  a  very  formi- 
dable indictment  of  direct  action  can  be  built  up. 

There  is  no  denying  that  direct  action  involves  grave  dangers, 
and  if  abused  may  theoretically  lead  to  very  bad  results.  In  this 
country  when  (in  191 7)  organized  labor  wished  to  send  delegates 
to  Stockholm,  the  Seamen's  and  Firemen's  Union  prevented  theni 
from  doing  so,  with  the  enthusiastic  approval  of  the  capitalist  press. 
Such  interference  of  minorities  wth  the  freedom  of  action  of  ma- 
jorities is  possible;  it  is  also  possible  for  majorities  to  interfere 
with  the  legitimate  freedom  of  minorities.  Like  all  use  of  force, 
whether  inside  or  outside  the  law,  direct  action  makes  tyranny  pos- 
sible. And  if  one  were  anxious  to  draw  a  gloomy  picture  of  terrors 
ahead,  one  might  prophesy  that  certain  well-organized,  vital  indus- 
tries— say,  the  Triple  Alliance  of  Miners,  Railwaymen,  and  Trans- 
port Workers — would  learn  to  combine,  not  only  against  the  em- 
ployers, but  against  the  community  as  a  whole.  We  shall  be  told 
that  this  will  happen  unless  a  firm  stand  is  made  now.  We  shall 
be  told  that  if  it  does  happen,  the  indignant  public  will  have,  sooner 
or  later,  to  devote  itself  to  the  organization  of  blacklegs,  in  spite  of 
the  danger  of  civil  disturbance  and  industrial  chaos  that  such  a 
course  would  involve.  No  doubt  such  dangers  would  be  real  if  it 
could  be  assumed  that  organized  labor  is  wholly  destitute  of  com- 
mon sense  and  public  spirit.  But  such  an  assumption  could  never 
be  made  except  to  flatter  the  fears  of  property  owners.  Let  us 
leave  nightmares  on  one  side  and  come  to  the  consideration  of  the 
good  and  harm  that  are  actually  likely  to  result  in  practice  from 


POWER  AND  POLICY  OF  ORGANIZED  LABOR     201 

the  increasing  resort  to  direct  action  as  a  means  of  influencing  gov- 
ernment. 

Many  people  speak  and  write  as  though  the  beginning  and  end 
of  democracy  were  the  rule  of  the  majority.  This,  for  example,  is 
the  view  of  Professor  Hearnshaw  in  his  recent  book  on  "Democracy 
at  the  Cross- Ways."  But  this  is  far  too  mechanical  a  view.  It  leaves 
out  of  account  two  questions  of  great  importance,  namely :  ( i )  What 
should  be  the  group  of  which  the  majority  is  to  prevail?  (2)  What 
are  the  m.atters  with  which  the  majority  has  a  right  to  interfere? 
Right  answers  to  these  questions  are  essential  if  nominal  dem.ocracy 
is  not  to  develop  into  a  new  and  more  stable  form  of  tyranny,  for 
minorities  and  subordinate  groups  have  the  right  to  live,  and  must 
not  be  internally  subject  to  the  malice  of  hostile  masses. 

The  first  question  is  familiar  in  one  form,  namely,  that  of  na- 
tionality. It  is  recognized  as  contrary  to  the  theory  of  democracy 
to  combine  into  one  state  a  big  natioQ  and  a  small  one,  when  the 
small  nation  desires  to  be  independent.  To  allow  votes  to  the  citi- 
zens of  the  small  nation  is  no  remedy,  since  they  can  always  be  out- 
voted by  the  citizens  of  the  large  nation.  The  popularly  elected  leg- 
islature, if  it  is  to  be  genuinely  demiocratic,  must  represent  one 
nation;  or,  if  more  are  to  be  represented,  it  must  be  by  a  federal 
arrangem.ent  which  safeguards  the  smaller  units.  A  legislature 
should  exist  for  defined  purposes,  and  should  cover  a  larger  or  smaller 
area,  according  to  the  nature  of  those  purposes.  At  this  moment, 
when  an  attempt  is  being  made  to  create  a  League  of  Nations  for 
certain  objects,  this  point  does  not  need  emphasizing. 

But  it  is  not  only  geographical  units,  such  as  nations,  that  have 
a  right,  according  to  the  true  theory  of  democracy,  to  autonomy  for 
certain  purposes.  Just  the  sam.e  principle  applies  to  any  group 
which  has  important  internal  concerns  that  affect  the  members  of 
the  group  enormously  more  than  they  affect  outsiders.  The  coal 
trade,  for  example,  might  legitimately  say:  "What  concerns  the 
community  is  the  quantity  and  price  of  coal  that  we  supply.  But 
our  conditions  and  hours  of  work,  the  technical  methods  of  our 
production,  and  the  share  of  the  produce  that  we  choose  to  allow  to 
the  landowners  and  capitalists  who  at  present  own  and  m^anage  the 
collieries,  all  these  are  internal  concerns  of  the  coal  trade,  in  which 
the  general  public  has  no  right  to  interfere.  For  these  purposes  we 
demand  an  internal  parliament,  in  which  those  who  are  interested  as 
owners  and  capitalists  may  have  one  vote  each,  but  no  more."  If 
such  a  demand  were  put  forward  it  would  be  as  impossible  to  resist 
on  democratic  grounds  as  the  demand  for  autonomy  on  the  part  of  a 
small  nation.  Yet  it  is  perfectly  clear  that  the  coal  trade  could 
not  induce  the  community  to  agree  to  such  a  proposal,  especially 


2C2      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

where  it  infringes  the  "rights  of  property,"  unless  it  were  sufficiently 
well  organized  to  be  able  to  do  grave  injury  to  the  community  in 
the  event  of  its  proposals  being  rejected — just  as  no  small  nation 
except  Norway,  so  far  as  my  memory  serves  me,  has  ever  obtained 
independence  from  a  large  one  to  which  it  was  subject,  except  by 
war  or  the  threat  of  war. 

The  fact  is  that  democracies,  as  soon  as  they  are  well  established, 
are  just  as  jealous  of  power  as  other  forms  of  government.  It  is 
therefore  necessary,  if  subordinate  groups  are  to  obtain  their  rights, 
that  they  shall  have  some  means  of  bringing  pressure  to  bear  upon 
the  government.  The  Benthamite  theory,  upon  which  democracy  is 
still  defended  by  some  doctrinaires,  was  that  each  voter  would  look 
after  his  own  interest,  and  in  the  resultant  each  man's  interest  would 
receive  its  proportionate  share  of  attention.  But  human  nature  is 
neither  so  rational  nor  so  self-centered  as  Bentham  imagined.  In 
practice  it  is  easier,  by  arousing  hatred  and  jealousies,  to  induce 
men  to  vote  against  the  interests  of  others  than  to  persuade  them  to 
vote  for  their  own  interests.  In  the  recent  General  Election  in  this 
country  very  few  electors  remembered  their  own  interests  at  all. 
They  voted  for  the  man  who  showed  the  loudest  zeal  for  hanging 
the  Kaiser,  not  because  they  imagined  they  would  be  richer  if  he 
were  hanged  but  as  an  expression  of  disinterested  hatred.  This  is 
one  of  the  reasons  why  autonomy  is  important:  in  order  that,  as 
far  as  possible,  no  group  shall  have  its  internal  concerns  determined 
for  it  by  those  who  hate  it.  And  this  result  is  not  secured  by  the 
mere  form  of  democracy;  it  can  only  be  secured  by  careful  devolu- 
tion of  special  powers  to  special  groups,  so  as  to  secure,  as  far  as 
possible,  that  legislation  shall  be  inspired  by  the  self-interest  of 
those  concerned,  not  by  the  hostility  of  those  not  concerned. 

This  brings  us  to  the  second  of  the  two  questions  mentioned 
above — a  question  which  is,  in  fact,  closely  bound  up  with  the  first. 
Our  second  question  was:  What  are  the  matters  with  which  the 
democracy  has  a  right  to  interfere?  It  is  now  generally  recognized 
that  religion,  for  example,  is  a  question  with  which  no  government 
should  interfere.  If  a  INIahometan  comes  to  live  in  England,  we 
do  not  think  it  right  to  force  him  to  profess  Christianity.  This  is  a 
comparatively  recent  change;  three  centuries  ago,  no  state  recog- 
nized the  right  of  the  individual  to  choose  his  own  religion.  (Some 
other  personal  rights  have  been  longer  recognized;  a  m.an  may 
choose  his  o\mi  wife,  though  in  Christian  countries,  he  must  not 
choose  more  than  one.)  When  it  ceased  to  be  illegal  to  hold  that  the 
earth  goes  round  the  sun,  it  was  not  made  illegal  to  believe  that  the 
sun  goes  round  the  earth.  In  such  matters  it  has  been  found,  with 
intense  surprise,  that  personal  liberty  does  not  entail  anarchy.     Even 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      203 

the  sternest  supporters  of  the  rule  of  the  majority  would  not  hold 
that  the  Archbishop  of  Canterbury  ought  to  turn  Buddhist  if  Par- 
liament ordered  him  to  do  so.  And  Parliament  does  not,  as  a  rule, 
issue  orders  of  this  kind,  largely  because  it  is  known  that  the  re- 
sistance would  be  formidable  and  that  it  would  have  support  in  pub- 
lic opinion. 

In  theory,  the  formula  as  to  legitimate  interferences  is  simple. 
A  democracy  has  a  right  to  interfere  with  those  of  the  affairs  of  a 
group  which  intimately  concern  people  outside  the  group,  but  not 
with  those  which  have  comparatively  slight  effects  outside  the  group. 
In  practice,  this  formula  may  sometimes  be  difficult  to  apply,  but 
often  its  application  is  clear.  If,  for  example,  the  Welsh  wish  to 
have  their  elementary  education  conducted  in  Welsh,  that  is  a  mat- 
ter which  concerns  them  so  much  more  intimately  than  any  one 
else  that  there  can  be  no  good  reason  why  the  rest  of  the  United 
Kingdom  should  interfere.  Thus  the  theory  of  democracy  de- 
mands a  good  deal  more  than  the  mere  mechanical  supremacy  of 
the  majorit3^  It  demands:  (i)  division  of  the  community  into 
more  or  less  autonomous  groups;  (2)  delimitation  of  the  powers  of 
the  autonomous  groups  by  determining  which  of  their  concerns  are 
so  much  more  important  to  themselves  than  to  others  that  others 
had  better  have  no  say  in  them.  Direct  action  may,  in  most  cases, 
be  judged  by  these  tests.  In  an  ideal  democracy  industries  or 
groups  of  industries  would  be  self-governing  as  regards  almost  every- 
thing except  the  price  and  quantity  of  their  product,  and  their  self- 
government  would  be  democratic.  Measures  which  they  would 
then  be  able  to  adopt  autonomously  they  are  now  justified  in  ex- 
torting from  the  government  by  direct  action.  At  present  the  ex- 
treme limit  of  imaginable  official  concession  is  a  conference  in  which 
the  men  and  the  employers  are  represented  equally,  but  this  is  very 
far  from  democracy,  since  the  men  are  much  more  numerous  than 
the  employers.  This  application  of  majority-rule  is  abhorrent  to 
those  who  invoke  majority-rule  against  direct  actionists;  yet  it  Is 
absolutely  in  accordance  with  the  principles  of  democracy.  It  must 
at  best  be  a  long  and  difficult  process  to  procure  formal  self-govern- 
ment for  industries.  Meanwhile  they  have  the  same  right  that  be- 
longs to  oppressed  national  groups,  the  right  of  securing  the  sub- 
stance of  autonomy  by  making  it  difficult  and  painful  to  go  against 
their  wishes  in  matters  primarily  concerning  themselves.  So  long 
as  they  confine  themselves  to  such  matters,  their  action  is  justified 
by  the  strictest  principles  of  theoretical  democracy,  and  those  who 
decry  it  have  been  led  by  prejudice  to  mistake  the  empty  form  of 
democracy  for  its  substance. 

Certain  practical  limitations,  however,  are  important  to  remem- 


204      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ber.  In  the  first  place,  it  is  unwise  for  a  section  to  set  out  to  extort 
concessions  from  the  government  by  force,  if  in  the  long  run  public 
opinion  will  be  on  the  side  of  the  government.  For  a  government 
backed  by  public  opinion  will  be  able,  in  a  prolonged  struggle,  to 
defeat  any  subordinate  section.  In  the  second  place,  it  is  important 
to  render  every  struggle  of  this  kind,  when  it  does  occur,  a  means  of 
educating  the  public  opinion  by  making  facts  known  which  v/ould 
otherv/ise  remain  more  or  less  hidden.  In  a  large  community  most 
people  know  very  little  about  the  affairs  of  other  groups  than  their 
own.  The  only  way  in  which  a  group  can  get  its  concerns  Viudel)'- 
known  is  by  affording  "copy"  for  the  newspapers,  and  by  showing 
itself  sufficiently  strong  and  determined  to  command  respect.  W^hen 
these  conditions  are  fulfilled,  even  if  it  is  force  that  is  brought  to 
bear  upon  the  government,  it  is  persuasion  that  is  brought  to  bear 
upon  the  community.  And  in  the  long  run  no  victory  is  secure 
unless  it  rests  upon  persuasion,  and  employs  force  at  most  as  a 
means  to  persuasion. 

The  mention  of  the  press  and  its  effect  on  public  opinion  sug- 
gests a  direction  in  which  direct  action  has  sometimes  been  advo- 
cated, namely,  to  counteract  the  capitalist  bias  of  almost  all  great 
newspapers.  One  can  imagine  compositors  refusing  to  set  up  some 
statement  about  trade-union  action  which  they  know  to  be  directly 
contrary  to  the  truth.  Or  they  might  insist  on  setting  up  side  by 
side  a  statement  of  the  case  from  the  trade-union  standpoint.  Such 
a  weapon,  if  it  were  used  sparingly  and  judiciously,  might  do  much 
to  counteract  the  influence  of  the  newspapers  in  misleading  public 
opinion.  So  long  as  the  capitalist  system  persists,  most  newspa- 
pers are  bound  to  be  capitalist  ventures  and  to  present  "facts"  in 
the  main,  in  the  way  that  suits  capitalistic  interests.  A  strong  case 
can  be  made  out  for  the  use  of  direct  action  to  counteract  this  ten- 
dency. But  it  is  obvious  that  very  grave  dangers  would  attend  such 
a  practice  if  it  became  common.  A  censorship  of  the  press  by  trade 
unionists  would,  in  the  long  run,  be  just  as  harmful  as  any  other 
censorship.  It  is  improbable,  however,  that  the  method  could  be 
carried  to  such  extremes,  since  if  it  were,  a  special  set  of  blackleg 
compositors  would  be  trained  up,  and  no  others  would  gain  admis- 
sion to  the  offices  of  capitalist  newspapers.  In  this  case,  as  in  others, 
the  dangers  supposed  to  belong  to  the  method  of  direct  action  are 
largely  illusory,  owing  to  the  natural  limitations  of  its  effectiveness. 

Direct  action  may  be  employed:  (i)  for  amelioration  of  trade 
conditions  wathin  the  present  economic  system;  (2)  for  economic 
reconstruction,  including  the  partial  or  complete  abolition  of  the 
capitalist  system;  (3)  for  political  ends,  such  as  altering  the  form 
of  government,  extension  of  the  suffrage,  or  amnesty  for  political 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      205 

prisoners.  Of  these  three  no  one  nowadays  would  deny  the  legit- 
imacy of  the  first,  except  in  exceptional  circumstances.  The  third, 
except  for  purposes  of  establishing  democracy  where  it  does  not  yet 
exist,  seems  a  dubious  expedient  if  democracy,  in  spite  of  its  faults, 
is  recognized  as  the  best  practicable  form  of  government;  but  in 
certain  cases,  for  example,  where  there  has  been  infringement  of 
some  important  right,  such  as  free  speech,  it  may  be  justifiable. 
The  second  of  the  above  uses  of  the  strike,  for  the  fundamental 
change  of  the  economic  system,  has  been  made  familiar  by  the 
French  Syndicalists.  It  seems  fairly  certain  that,  for  a  considerable 
time  to  come,  the  main  struggle  in  Europe  will  be  between  capital- 
ism and  some  form  of  Socialism,  and  it  is  highly  probable  that  in 
this  struggle  the  strike  will  play  a  great  part.  To  introduce  democ- 
racy into  industry  by  any  other  method  would  be  very  difficult.  And 
the  principle  of  group  autonomy  justifies  this  method  so  long  as  the 
rest  of  the  community  opposes  self-government  for  industries  which 
desire  it.  Direct  action  has  its  dangers,  but  so  has  every  vigorous 
form  of  activity.  And  in  our  recent  realization  of  the  importance 
of  law  we  must  not  forget  that  the  greatest  of  all  dangers  to  a 
civilization  is  to  become  stereotyped  and  stagnant.  From  this  dan- 
ger, at  least,  industrial  unrest  is  likely  to  save  us. 

J.  G.  Brooks:  American  Syndicalism,  and  the  I.W.W* 

(pp.  135-7) 

When  a  leader  like  Tom  Mann  in  England  warns  his  followers 
against  making  any  agreement  except  of  the  most  temporary  na- 
ture with  the  managers  of  capital;  when  he  tells  them  that  every 
provision  for  peace  between  the  two  parties  is  a  perpetrated  wrong 
on  labor,  we  see  the  whole  relation  set  squarely  on  a  war  footing, 
and  its  chosen  weapons  are  those  of  war.  Old-fashioned  strikes  are 
to  go  on,  but  with  a  new  purpose.  They  are  to  be  quick  and  sharp 
in  order  to  save  ammunition.  The  men,  even  when  striking,  are 
"to  keep  at  work  but  spoil  the  product."  They  are  "suddenly  to 
return  to  their  jobs  before  strikebreakers  appear,  but  to  drop  work 
again  until  the  boss  is  tired  out."  The  short  strike  is  not  only  to 
pester  the  employers;  it  is,  like  army  drill,  to  become  the  school  of 
practice  in  preparation  for  the  coming  general  or  universal  strike. 
French  syndicalists  actually  use  the  word  greviculture  (strike  cul- 
ture) as  if  strikes  could  be  nursed  and  grown  like  plants  in  a 
garden. 

Behind  all  this  is  the  assumption  that  the  business  man  repre- 
senting capitalism  can  be  worried  into  submission  by  losses  in  the 
*  Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 


2o6      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

shop  and  mill.  This  again  takes  for  granted  two  things:  first,  the 
decrepitude  of  our  business  system,  and,  secondly,  the  ability  and 
preparedness  of  labor  (as  defined  by  Syndicalists)  to  take  over  and 
administer  capitalist  production.  The  saner  among  them  do  not 
claim  that  this  can  be  done  "at  once,"  but  only  as  capitalist  man- 
agement is  worn  out  by  the  unremitting  plague  which  labor  can 
inflict  on  capital  by  refusing  any  longer  to  play  the  capitalist  game. 
"From  now  on,"  says  Tom  Mann,  "we  know  the  enemy  and  how  to 
deal  with  him."  .  .  . 

As  this  volume  goes  to  press,  an  Article  on  Direct  Action  appears 
in  The  Independent,  January  9th,  by  a  writer  for  the  French  La 
Bataille  Syndicaliste.  It  has  the  more  value  as  it  was  "passed  upon" 
by  Haywood,  Bohn  and  Ettor — the  two  former  associate  editors  on 
the  International  Socialist  Review.  The  writer,  ISIr.  Andre  Tridon, 
shows  at  once  how  difficult  it  is  to  distinguish  direct  action  from 
sabotage.  Both  alike  are  schools  of  solemn  and  vigorous  instruc- 
tion for  the  destruction  of  capitalism.  Syndicalists,  he  assures  us, 
"do  not  recognize  the  employer's  right  to  live  any  more  than  a  phy- 
sician recognizes  the  right  of  typhoid  bacilli  to  thrive  at  the  expense 
of  a  patient,  the  patient  merely  keeping  alive."  He  shows  the  im- 
portance of  studying  market  conditions  so  that  the  blow  may  fall 
when  the  employer  is  "rushed  with  orders."  Two  Syndicalist  vet- 
erans, Pouget  and  Faure,  have  recently  dealt  with  "technical  in- 
struction as  revolution's  handmaid"  which  Mr.  Tridon  offers  us 
for  up-to-date  suggestiveness. 

"The  electrical  industry  is  one  of  the  most  important  industries, 
as  an  interruption  in  the  current  means  a  lack  of  light  and  power 
in  factories;  it  also  means  a  reduction  in  the  means  of  transporta- 
tion and  a  stoppage  of  the  telephone  and  telegraph  systems. 

"How  can  the  power  be  cut  off?  By  curtailing  in  the  mine  the 
output  of  the  coal  necessary  for  feeding  the  machinery  or  dropping 
the  coal  cars  on  their  way  to  the  electrical  plants.  If  the  fuel 
reaches  its  destination,  what  is  simpler  than  to  set  the  pockets  on 
fire  and  have  the  coal  burn  in  the  yards  instead  of  the  furnaces?  It 
is  child's  play  to  put  out  of  work  the  elevators  and  other  automatic 
devices  which  carry  coal  to  the  fireroom. 

"To  put  boilers  out  of  order  use  explosives  or  silicates  or  a  plain 
glass  bottle  which,  thrown  on  the  glowing  coals,  hinders  the  com- 
bustion and  clogs  up  the  smoke  exhausts.  You  can  also  use  acids 
to  corrode  boiler  tubes;  acid  fumes  will  ruin  cylinders  and  piston 
rods.  A  small  quantity  of  some  corrosive  substance,  a  handful  of 
emery,  will  be  the  end  of  oil  cups.  When  it  comes  to  dynamos  or 
transformers,  short  circuits  and  inversions  of  poles  can  be  easily 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      207 

managed.     Underground  cables  can  be  destroyed  by  j5re,  water, 
plyers,  or  explosives,  etc.,  etc." 

Here  we  see  the  "saving  power  of  the  revolution"  transferred 
from  the  field  of  politics  and  reform  to  the  nerve  centers  of  produc- 
tion. Here  the  "system"  is  tp  be  paralyzed  by  the  daring  of  "small, 
energetic  minorities"  through  direct  action.  Never  a  satisfying 
word  is  given  us  as  to  what  these  daring  minorities  are  to  do  with  the 
majorities  after  the  system  is  smitten.  How  are  the  beaten  majori- 
ties to  be  convinced  and  managed?  In  the  familiar  patois  of  the 
Anarchist,  we  are  reminded  that  "minorities  are  always  in  the  right." 
This  is  not  Frederick  Douglass,  "One  with  God  is  a  majority,"  but 
"A  minority  with  God  is  a  majority." 

Final  Report  of  Federal  Commission,  on  Industrial 
Relations,  1915  (p.  89) 

The  fundamental  question  for  the  Nation  to  decide,  for  in  the 
end  public  opinion  will  control  here  as  elsewhere,  is  v;hether  the 
workers  shall  have  an  effective  means  of  adjusting  their  grievances, 
improving  their  condition,  and  securing  their  liberty,  through  nego- 
tiation with  their  employers,  or  whether  they  shall  be  driven  by 
necessity  and  oppression  to  the  extreme  of  revolt.  Wliere  men  are 
v/ell  organized,  and  the  power  of  employers  and  employes  is  fairly 
well  balanced,  agreements  are  nearly  always  reached  by  negotia- 
tion; but,  even  if  this  fails,  the  strikes  or  lockouts  which  follow  are 
as  a  rule  merely  cessations  of  work  until  economic  necessity  forces 
the  parties  together  again  to  adopt  some  form  of  compromise.  With 
the  unorganized,  there  is  no  hope  of  achieving  anything  except  by 
spontaneous  revolt.  Too  often  has  it  been  found  that  during  the 
delay  of  attempted  negotiations,  the  leaders  are  discharged,  and 
new  m^en  are  found  ready  to  take  the  place  of  those  who  protest 
against  conditions.  Without  strike  funds  or  other  financial  sup- 
port, the  unorganized  must  achieve  results  at  once;  they  cannot  af- 
ford to  wait  for  reason  and  compromise  to  come  into  play.  Lacking 
strong  leaders  and  definite  organization,  such  revolts  can  only  be 
expected  to  change  to  mob  action  on  the  slightest  provocation. 

Looking  back  over  the  industrial  history  of  the  last  quarter  cen- 
tury, the  industrial  disputes  which  have  attracted  the  attention  of 
the  country,  and  which  have  been  accompanied  by  bloodshed  and 
violence  have  been  revolutions  against  industrial  oppression,  and  not 
mere  strikes  for  the  improvement  of  working  conditions.  Such  rev- 
olutions in  fact  were  the  railway  strikes  of  the  late  eighties,  the 
Homestead  strike,  the  bituminous  coal  strike  of  i8q7,  the  anthracite 
strikes  of  1900  and  1903,  the  strike  at  McKees  Rocks  in  1909,  the 


2o8      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Bethlehem  strike  of  19 lo,  the  strikes  in  the  textile  mills  at  Law- 
rence, Paterson  and  Little  Falls,  many  of  the  strikes  in  the  mining 
camps  of  Idaho  and  Colorado,  the  garment  workers'  strikes  in  New 
York  and  other  cities,  the  recent  strikes  in  the  mining  districts  of 
West  Virginia,  Westmoreland  Co.,  Pa.,  and  Calumet,  Mich. 

As  a  result,  therefore,  not  only  of  fundamental  considerations 
but  of  practical  investigations,  the  results  of  which  are  described  in 
detail  hereinafter,  it  would  appear  that  every  means  should  be  used 
to  extend  and  strengthen  organizations  throughout  the  entire  indus- 
trial field. 

Paul  U.  Kellogg  and  Arthur  Gleason:  British  Labor 
and  the  War""  (pp.  168,  172-7) 

Out  of  1,095,000  British  coal  miners,  800,000  are  organized  in 
the  Miners'  Federation  of  Great  Britain,  of  which  Robert  Smillie 
is  head.  In  191 5  he  became  chairman,  also,  of  the  new  Triple  Al- 
liance, composed  of  the  Miners,  the  National  Transport  Workers' 
Federation,  and  the  National  Union  of  Railwaymen.  The  Triple 
Alliance  with  its  million  and  a  half  men,  is  the  strongest  offensive 
amalgamation  that  has  ever  been  made  in  the  trade  union  world. 
Controlling  fuel  and  the  machinery  of  transport,  it  can  hold  up  the 
economic  life  of  Great  Britain.  Of  the  miners  alone,  and  their 
head,  Clynes  once  said  that  they  unmake  cabinets,  and  another 
trade  unionist  felt  their  power  so  keenly  that  he  reminded  them  that 
they  were  not  God  Almighty.    .    .    . 

THE   TRIPLE   ALLIANCE 

To  turn  to  the  other  members  of  the  Triple  Alliance.  The  rail- 
way service  is  well  organized.  The  National  Union  of  Railwaymen 
has  401,000  members.  Its  secretary  is  J.  H.  Thomas,  M.P.  He  is 
one  of  the  half-dozen  strongest  labor  leaders  in  Great  Britain.  He 
has  canny  common  sense,  limpid  sincerity,  and  a  powerful  voice  out 
of  a  small  body  to  make  knov/n  his  views. 

The  other  considerable  unions  in  the  railway  service  are  the 
Associated  Society  of  Locomotive  Engineers  and  Firemen  (38,000), 
and  the  Railway  Clerks'  Association  (60,000).  Altogether  there 
are  610.000  railway  employes.    .    .    . 

Under  the  occupational  group  of  transport  come  the  National 
Sailors  and  Firemen's  Union  (70,000),  National  Union  of  Ships' 
Stewards,  Cooks,   Butchers  and  Bakers   (20,000);    the  Waterside 

*  Copyright,  Boni  &  Liveright. 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      209 

workers  with  their  National  Union  of  Dock  Laborers  (50,000),  Dock, 
Wharf,  Riverside  and  General  Workers'  Union  (65,000);  the  vehicle 
workers  with  their  vehicle,  tramway,  motormen,  lorrymen,  and  cart- 
ers associations.  The  National  Transport  Workers'  Federation  has 
over  300,000  members. 

The  Triple  Alliance  grew  naturally  out  of  a  need.  A  coal  strike 
hits  railwayman.  A  railway  strike  hits  miners  and  dockers.  A  dock 
strike  ties  up  coal  brought  by  railwaj-s  to  the  waterfront.  Strikes  in 
191 1  and  19 1 2  on  railways,  docks  and  mines  had  partly  failed,  so 
the  executives  of  the  Miners,  the  National  Union  of  Railwaymen  and 
the  National  Transport  Workers'  Federation  held  conferences  in 
1914,  and  a  schem^e  of  joint  action  was  ratified  on  December  9,  1915, 
for  "matters  of  a  national  character." 

^\^^len  a  delegation  from  the  Triple  Alliance  visited  the  Premier, 
the  London  Times  said: 

The  delegates  are  waiting  on  the  Prime  Minister  to  issue  their 
orders.  This  body  of  trade  unionists  is  formally  attempting  to  super- 
sede constitutional  government  and  to  frighten  the  appointed  Minis- 
ters of  the  Crown  into  doing  their  will. 

There  is  no  question  that  Robert  Smillie,  Vernon  Hartshorn, 
J.  H.  Thomas,  Robert  Williams,  and  the  other  members  of  the  three 
executive  committees  of  the  Triple  Alliance  see  the  vast  implications 
of  their  coalition.  Such  power  has  passed  into  their  hands  as  no 
human  beings  outside  a  war  cabinet  have  exercised  in  modern  days. 
They  will  mould  the  British  labor  movement  of  the  future,  and  the 
structure  of  the  state  may  be  modified  by  their  action.    .    .    . 

To  sum  up: — Nearly  half  of  the  male  adult  wage-earning  popu- 
lation is  organized  into  trade  unions.  Unskilled  or  general  workers 
have  come  inside  trade  union  organization  during  the  last  four 
years  at  an  unprecedented  rate.  Thus  the  National  Union  of  Gen- 
eral Workers  increased  its  membership  by  over  100,000  in  191 7. 
The  old  threat  of  unorganized,  casual,  unskilled,  overworked,  under- 
paid workers  destroying  the  structure  of  trade  unionism  has  disap- 
peared. Their  incorporation,  however,  is  effecting  profound  changes 
in  that  structure.  In  spite  of  many  craft  unions,  great  groups  have 
formed,  and  the  unions  have  learned  their  power  in  the  state. 

They  compose  a  Trades  Union  Congress,  with  a  membership  of 
over  four  million.  Their  political  expression  is  the  British  Labor 
Party,  with  a  trade  union  membership  of  2,415,383.  Seven  hundred 
and  fifty  thousand  workers  are  organized  in  the  General  Federation 
of  Trade  Unions  for  strike  insurance  benefits  and  other  purposes. 
Three  great  groups  have  formed  the  Triple  Industrial  Allianca 


210     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

These  organizations  represent  the  long  struggle  of  the  workers  for 
recognition.  They  have  Vv^on  power,  and  they  begin  to  wield  it. 
The  coming  years  will  witness  their  use  of  it  in  achieving  self- 
government  in  industry  and  in  reconstructing  the  economic  order. 

We  have  tried  to  give  a  fair  and  unbiased  interpretation  of  the 
facts  such  as  we  have  found  them,  not  an  expression  of  our  own  views 
on  economic  or  political  theory.  Much  of  the  discussion  of  the  rise 
of  labor,  both  in  Great  Britain  and  in  the  United  States,  is 
unintelligent  because  it  assumes  that  we  still  have  to  deal  with 
Socialism  as  embodied  in  academic  programs  or  with  debatable 
questions  of  labor  organization.  Some  people  may  be  startled  when 
they  realize  the  degree  of  power  and  of  class-conscious  organiza- 
tion already  reached  by  British  labor  in  the  economic  field.  But 
it  is  only  by  such  realization  that  statesmen,  industrial  managers 
and  labor  leaders  alike  will  be  able  to  deal  with  the  forces  at  work 
in  the  economic  order  intelligently  and  constructively.  A  mere 
opposition  is  as  useless  as  drifting,  and  will  have  no  other  effect 
than  that  of  aggravating  the  clash  of  interests  and  philosophies 
which  is  bound  to  come  to  a  decision  before  long. 


2.    TRADE  UNIONS 

Robert  F.  Home:  Trade  Unionism  in  the  United 
States^  (pp.  130-4,  274). 

The  American  Federation  of  Labor  has  both  succeeded  and  failed. 
The  causes  of  its  success  may  be  explained  largely  by  its  supremely 
adaptable  and  catholic  character,  made  possible  by  its  non-theoreti- 
cal, opportunistic,  trial  method  and  ideals,  and  its  loose  organization. 
It  is  thus  sufficiently  broad  and  elastic  to  have  a  place  within  itself 
for  every  form  and  type  of  organization — structurally  and  func- 
tionally— that  has  arisen  and  proved  itself  effective  in  the  history 
of  American  unionism.  It  has  found  a  place  and  function  within 
itself  for  the  trade  union,  the  trades  union  (city,  central  and  state 
federation),  the  labor  union,  the  industrial  union,  and  the  various 
transitional  forms;  for  business  unionism,  uplift  unionism,  radical 
or  revolutionary  unionism  and  predatory  unionism;  it  is  loosely 
enough  organized  to  allow  of  every  variation  of  centralization  and 
discipline  which  the  particular  needs  and  conditions  warrant.  For 
example,  there  is  centralization  and  strong  discipline  of  national 
vmions  where  conditions  demand  them  and  decentralization  and  weak 
discipline  of  federal  forms  where  needs  and  jealousies  exist.  It  is 
theoretically  and  organically  elastic  enough  to  allow  scope  to  the 
principle  of  change  and  growth,  and  thus  to  the  adoption  and  crea- 
tion of  new  forms  and  the  assumption  of  new  functions  as  develop- 
ing conditions  demand  them,  such  as  system  federations,  depart- 
ments, and  its  political  program.  It  thus  reflects  in  a  remarkable 
way  the  changing  conditions,  needs,  problemxS,  and  methods  of  the 
workers  within  the  field  of  its  operation.  Within  this  field  it  reflects 
pretty  accurately — subject  of  course  to  the  law  of  retardation — 
the  character  of  capitalistic  organization,  that  is,  the  degree  of  craft- 
wise  and  industrial-wise  business  organization  and  the  idealism  and 
materialism,  the  radicalism  and  conservatism,  the  mutuality  and 
selfishness,  of  the  workers.  In  short,  it  pretty  accurately  reflects 
within  the  field  of  its  operation  the  degree  of  unity,  and  of  com- 
munity of  spirit,  the  extent  of  common  problems,  ideals  and  con- 

*  Copyright,  1917,  by  D.  Appleton  and  Company.    Reprinted  by  permis- 
sion. 

211 


212      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ditions  of  the  workers.  It  has  always  made  everything  else  sec- 
ondary to  the  supreme  need  of  the  workers  in  terms  of  immediate 
results,  or,  as  Mr.  Gompers  says,  ''more,  more,  more,  now,"  in  the 
form  of  higher  wages,  shorter  hours,  better  working  conditions 
here  and  now.  In  other  words,  its  prime  aim  is  to  "deliver  the 
goods."  And  finally,  it  has  had  extraordinary  fortune  in  the  con- 
tinuity and  character  of  its  leadership.  Mr.  Gompers  has  been  at 
the  helm  since  1886,  except  for  one  year,  1894;  it  has  had,  there- 
fore, a  continuous  policy  and  has  been  delivered  from  the  struggle 
for  leadership.  In  short,  the  American  Federation  of  Labor  is  an 
organization  structurally  and  functionally  of  such  a  character  that, 
while  guaranteeing  to  each  craft  autonomy  in  trade  affairs,  it  can 
unite  them  on  economic  grounds,  smooth  out  their  differences,  and 
gradually  educate  them  to  closer  relationship. 

But  has  the  American  Federation  of  Labor  succeeded?  (i) 
Though  it  claims  to  represent  the  working  class  and  aims  at  universal 
organization,  yet  in  more  than  thirty  years  it  has  succeeded  in 
organizing  less  than  ten  per  cent  of  the  workers.  (2)  It  lacks  the 
adherence  of  some  of  the  strongest  and  most  successful  unions,  such 
as  the  Railway  Brotherhoods.  (3)  It  has  found  itself  unable  to 
make  headway  or  maintain  its  position  in  great  trust-controlled  in- 
dustries. (4)  It  has  proved  unequal  to  its  adversary  in  its  struggle 
against  strong  employers'  associations.  (5)  It  has  failed  generally 
to  organize  and  help  the  unskilled  workers.  (6)  It  has  not  been 
able  to  prevent  altogether  predatory  combinations  between  em- 
ployers and  unions  to  the  detriment  of  other  organized  workers. 
(7)  It  has  failed  thus  far  to  solve  the  problem  of  jurisdictional 
disputes  involving  alike  destruction  of  the  welfare  of  the  workers, 
the  employers,  and  the  public.  (8)  It  has  failed  to  secure  una- 
nimity and  general  support  of  its  broad  welfare  policies,  for  ex- 
ample, the  use  of  union  labeled  goods.  (9)  It  seems  impotent  against 
scientific  management  and  advanced  management  with  its  progressive 
specialization  and  destruction  of  the  very  essence  of  the  craft  founda- 
tion of  unionism. 

After  having  considered  the  general  character  of  the  American 
Federation  of  Labor  and  reviewed  its  successes  and  failures,  can  we 
say  that  it  presents  the  key  to  the  solution  of  the  union  problem? 
Does  it  furnish  a  means  of  getting  the  benefits  of  unionism  for  the 
workers  most  in  need  of  them,  and  of  solving  the  problems  of 
efficiency,  unhampered  industrial  development,  universal  opportunity 
to  the  workers,  social  order  and  industrial  peace?  In  so  far  as 
it  has  failed  in  this  connection,  what  are  the  prime  causes  of  its 
failure?  There  appear  to  be  two  which  stand  out  clearly:  First,  under 
the  present  system  of  capitalistic  enterprise  based  upon  machine 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      213 

industry,  no  common  standard  of  right,  rights,  and  justice  exist 
which  can  be  appealed  to  for  securing  working  class  betterment. 
Therefore,  the  general  betterment  of  the  workers'  condition  through 
unionism  requires  a  general  organization  of  the  workers  superior  in 
power  to  the  employers.  Second,  no  working  class  power  superior 
to  the  employers  can  be  developed  in  pursuit  of  the  ideal  of  immedi- 
ate results,  secured  by  bargaining,  because  under  the  capitalistic 
system  immediate  betterment  can  be  secured  by  the  workers  through 
bargaining,  only  by  control  and  manipulation  of  the  labor  supply. 
This  means  that  the  pursuit  of  the  ideal  must  immediately  develop 
the  selfish  and  monopolistic  group  feeling.  This  effectually  bars  out 
the  attainment  of  working  class  solidarity  and  power,  for  it  causes 
the  stronger  unions  to  hold  aloof,  pits  the  organized  against  the  un- 
organized, and  causes  a  constant  desertion  of  the  brains  of  the  move- 
ment to  the  employers.  In  short,  if  the  failure  of  the  American  Fed- 
eration of  Labor  could  be  simmered  down  to  a  single  phrase,  it 
would  be  "lack  of  tactical  idealism."  It  is  another  question  whether 
this  idealism — the  unselfish  class  spirit — can  be  developed  under 
present  conditions  where  the  mass  of  the  workers  are  barred  out 
from  taking  a  broad  and  long-timed  view  of  life's  affairs  by  the  cold 
fact  that,  as  things  are,  their  immediate  conditions  of  life  do 
depend  upon  the  labor  supply  and  they  can  have  absolutely  no 
guarantee  of  the  future.    .    .    . 

Agreement  on  general  principles  of  right  and  justice  is  not  the 
sticking  point.  Collective  bargaining  is  rather  a  compromise.  But 
we  know  that  there  are  no  standards  which  both  sides  recognize,  and 
therefore  the  compromise  is  an  unstable  affair.  Neither  side  is  really 
satisfied.  It  is  an  inconclusive  peace.  Accordingly,  the  obligation 
of  the  contract  tends  to  be  taken  lightly  by  both  sides.  This  is 
one  of  the  great  weaknesses  of  collective  bargaining,  even  as  a 
settlement  of  group  difficulties. 

Collective  bargaining  and  arbitration,  however,  are  steps  toward 
full  labor  control.  They  are  an  entering  wedge  toward  industrial 
democracy  and  abolition  of  the  profits  system.  Recognition  of  the 
union  is  the  first  step,  since  individual  bargaining  gives  the  workers 
no  voice.  This,  then,  is  the  important  thing — not  the  lack  of  a 
principle  of  justice.  Collective  bargaining  is  not  an  instrument  of 
peace  primarily. '  It  is  a  step  in  the  process  of  control.  Indeed,  the 
significant  thing  about  unionism  is  the  development  of  a  process 
of  control.  This  is  the  larger  aspect  of  unionism  and  in  this  sense 
collective  bargaining  is  a  solution  of  the  labor  problem. 


214      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Monthly  Labor  Review,  U.  S.  Bureau  of  Labor ,  Strikes 
and  Lockouts,  1916-18 

The  large  increase  in  number  of  strikes  during  the  month  of 
May  in  each  year  is  accounted  for  by  the  fact  that  the  trade  agree- 
ments in  many  industries  terminated  on  the  30th  day  of  April  and 
the  unions  very  generally  asked  for  an  increase  in  wages  in  making 
the  new  agreement  with  their  employers.  Reports  for  the  closing 
months  of  the  year  19 18  are  incomplete,  since  reports,  aside  from 
those  obtained  from  the  daily  and  weekly  papers  and  periodicals,  fre- 
quently do  not  reach  the  bureau  until  several  months  after  the  strike 
has  ended.  Corrected  figures  for  these  months  will  therefore  un- 
doubtedly show  a  considerable  increase  over  those  here  given,  proba- 
bly totaling  at  least  3,400  when  such  figures  are  received. 

The  disturbances  for  the  year  do  not  seem  to  have  been  confined 
to  any  district  or  industry.  One-seventh  of  the  strikes  occurred  in 
New  York  City  and  vicinity.  It  is  difficult  to  particularize  the 
more  important  strikes  of  the  tvv^o-year  period,  191 7  and  1918. 
Many  of  them  were  short  and  involved  large  numbers  of  employes. 
In  both  years  strikes  of  miners,  shipbuilders,  longshoremen,  machin- 
ists, and  workers  connected  with  the  erection  of  cantonments  through- 
out the  country  attracted  general  attention.  In  191 7  probably  the 
largest  disturbances  were  those  that  occurred  in  the  oil  fields  of 
Louisiana  and  Texas;  in  the  telephone  systems  in  Arkansas  and  the 
Pacific  northwest;  in  the  packing  houses  in  St.  Louis  and  Omaha; 
am.ong  the  sugar-cane  workers  in  Porto  Rico;  in  the  sugar  refineries 
in  New  York  and  Philadelphia;  among  the  potters  in  Ohio  and  New 
Jersey;  in  the  silk  mills  in  Hoboken  and  vicinity;  in  the  iron  and  s^eel 
industry  in  Pittsburgh;  among  the  cigar  makers  in  Porto  Rico  and 
New  York  City;  hatters  in  Danbury,  Conn.;  shoemakers  in  New 
York  City;  in  the  various  clothing  industries  in  New  York  City, 
Philadelphia,  and  Chicago;  in  the  northwest  lumber  industry;  and 
the  general  strike  in  Minneapolis  and  St.  Paul.  In  19 18  probably 
the  largest  disturbances  were  those  that  occurred  am.ong  the  tailors 
of  New  York  City;  in  the  textile  industry  in  New  Hampshire,  Rhode 
Island,  and  Philadelphia;  among  the  garment  workers  in  Chicago  and 
the  tailors  in  New  York  City;  the  paper  mil's  in  northern  New  York; 
the  cigar  makers  of  New  York  City  and  St.  Louis;  the  trolly  sys- 
tems of  Buffalo,  Kansas  City,  and  St.  Louis;  the  molders  and  team- 
sters of  Chicago;  the  retail  clerks  of  St.  Louis;  the  pressmen  and 
waiters  and  subway  laborers  in  New  York  City;  the  General  Electric 
strike;  and  the  general  strike  in  Kansas  City. 

The  largest  number  of  disputes  occurred  in  the  leading  manu- 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      215 

facturing  States — New  York,  Massachusetts,  Pennsylvania,  Ohio, 
and  Illinois,  over  one-half  of  the  strikes  being  in  these  States.  .  .  . 

In  19 1 8  the  employes  were  connected  with  unions  in  1,811  strikes 
and  73  lockouts;  they  were  not  connected  with  unions  in  356  strikes 
and  4  lockouts;  in  26  strikes  they  were  not  so  connected  at  the  time 
of  striking,  but  organized  almost  immediately  thereafter;  in  988 
strikes  and  27  lockouts  the  relation  of  employes  to  unions  was  not 
reported.  In  191 7  the  corresponding  figures  were  2,277  strikes  and 
95  lockouts,  201  strikes  and  3  lockouts,  55  strikes,  and  1,700  strikes 
and  28  lockouts.  In  1916  the  figures  were  2,361  strikes  and  94  lock- 
outs, 441  strikes  and  5  lockouts,  70  strikes  and  i  lockout,  and  806 
strikes  and  8  lockouts. 

The  causes  of  strikes  and  lockouts  were  numerous.  Aside  from 
wages  few  strikes  occurred  in  which  the  cause  was  confined  to  one 
matter  in  dispute.  The  principal  causes  are  shown  in  the  table 
following: 


PRINCIPAL  CAUSES  OF  STRIKES  AND  LOCKOUTS,  1916,  1917  AND  1918. 


Matter  of  dispute. 


Strikes. 


1916  1917  191 


Lockouts. 


1916        1917       1918 


Increase  of  wages 

Decrease  of  wages 

Nonpayment  of  wages 

Increase  of  hours 

Decrease  of  hours 

Increase  of  wages  and  decrease  of  hours 

General  conditions 

Conditions  and  wages 

Conditions  and  hours 

Conditions,  wages,  and  hours 

Conditions  and  recopnition 

Recognition  of  the  union 

Recognition  and  wages 

Recognition  and  hours 

Recognition,  wages,  and  hours 

Discharge  of  foreman  demanded 

Discharge  of  employees 

Employment  of  non-union  men 

In  regard  to  the  agreement 

New  agreement 

Syinpathy 

Jurisdiction 

M  iscellaneous 

Not  reported 

Total 


1,290 

33 

13 

3 

III 

479 
59 
56 


3U 

122 

22 

68 

17 

122 

70 

38 

37 

32 

19 

117 

598 


3.673 


1.507 
34 
17 


372 
9S 
70 
17 
26 
13 

275 

148 
27 
56 
37 

303 
76 
75 
22 

68 

20 

173 

762 


1.352 

34 

31 

6 

79 

24S 

54 

50 


7 

186 

95 

16 

66 

53 

137 

6r 

41 

4 

34 

16 

170 

431 


7 
33 


39 
5 


S 
30 


9 
35 


108 


126 


104 


The  number  of  persons  involved  in  strikes  and  lockouts  is  shown 
in  the  table  following: 


2i6     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


NUMBER  OF  STRIKES  AND  LOCKOUTS,  BY  CLASSIFIED  NUMBER  OF  PERWDNS 
INVOLVED,    1916,    X917   AND    1918. 


Number 

Strikes. 

Lockouts. 

Number  of 
persons 
involved. 

Strikes. 

Lockouts. 

of  persons 
involved. 

1916 

1917 

1918 

1916 

1917 

1918 

1916 

1917 

1918 

1916 

1917 

1918 

I  to  10 

II  to  25.-  • 
26  to  so..  . 
SI  to  100. . 

197 
345 
411 
411 
395 
348 

151 
268 
318 
343 
338 
281 

135 
256 
318 
337 
354 
272 

13 

10 

IS 

7 

4 

6 

7 
8 
9 
3 
10 
3 

9 
10 

9 
13 
13 

9 

SOI  to  1,000. . . 
1,001  to  10,000 
Over  10,000. .  . 
Not  reported .  . 

Total 

238 

233 

22 

1,078 

191 

217 

67 

2,059 

139 

200 

16 

1. 154 

3 

S 

I 

44 

I 

4 

1 

80 

a 

4 

I 

34 

251  to  500. 

3,678 

4.233 

3,l8l 

108 

126 

104 

RESULTS    OF    STRIKES    AND    LOCKOUTS,    1916,    1917.    AND    1918. 


Result. 

Strikes. 

Lockouts. 

1916 

1917 

1918 

1916 

1917 

1918 

724 

733 

766 

70 

99 

366 
S8l 
679 
131 
142 

417 
591 
659 
198 
212 

21 
16 
II 
3 

2 

13 

17 

21 

6 

I 

5 

IS 

17 

Employees  returned  pending  arbitration . . 

S 
21 

Total  

2,392 

1,899 

2,077 

S3 

58 

63 

DURATION    OF   STRIKES   AND    LOCKOUTS,    1916,    1917.   AND    1918. 


Strikes. 

Lockouts. 

Duration. 

Strikes. 

Lockouts 

Duration. 

1916 

1917 

1918 

1916 

1917 

1918 

1916 

1917 

1918 

1916 

1917 

1918 

Less  than 
I  day . . 

1  day 

2  days .  . . 

3  days .  . . 

4  days .  .  . 

5  days.  .  . 

38 

141 

183 

146 

124 

129 

109 

91 

85 

48 

106 

40 

42 

26 

60 

142 

88 
190 
107 
89 
57 
45 
61 
86 

25 

25 
39 
23 
37 
12 
37 

69 

84 

140 

164 

119 

108 

66 

63 

112 

55 

37 

54 

23 

24 

16 

47 

84 

19  to  21  days.. 
22  to  24  days.. 
25  to  28  days.. 
29  to  31  days.. 
32  to  35  days.. 
36  to  42  days. . 
43  to  49  days. . 
so  to  63  days. . 
64  to  77  days.. 
78  to  91  days.. 
92  to  199  days. 
Over  200  days 
Not  reported .  . 

Total 

82 
38 
60 
53 
25 
48 
22 
53 
39 
26 
87 
17 
332 

42 
21 
31 
28 
26 
33 
25 
35 
19 
II 
49 
9 
580 

64 
36 
33 
55 
27 
37 
29 
39 
16 
15 
28 
21 
479 

I 
I 
I 

2 

I 
3 

a 

2 

I 
I 
I 
3 
2 
I 
2 
2 
I 

2 
2 
3 

I 
I 

2 
3 

I 

a 
a 

2 
2 

1 
3 

I 
I 

7  days .  .  . 

8  days .  .  . 

9  days.  .  . 

10  days. . 

11  days.  . 

12  days. . 

13  days. . 

14  days. . 

15  to  18 
days... 

2 

2 
I 

3 

7 

I 

I 

12 

6 

3 

I 
4 

a 

I 

24 

2a 

I 
3 

6 

I 
I 

2 

4 

2,392 

1,899 

2,077 

53 

58 

63 

POWER  AND  POLICY  OF  ORGANIZED  LABOR      217 

-  Labor  Clauses  Adopted  by  the  Peace  Conference* 
April  28,  1919 

The  following  clauses  proposed  by  the  Commission  on  Inter- 
national Labor  Legislation  and  in  revised  form  as  presented  by  Sir 
Robert  Borden  for  insertion  in  the  Treaty  of  Peace  were  adopted  by 
the  Peace  Conference  in  Plenary  Session  yesterday: 

"The  High  Contracting  Parties,  recognizing  that  the  well-being, 
physical,  moral,  and  intellectual,  of  industrial  wage  earners  is  of 
supreme  international  importance,  have  framed  a  permanent  ma- 
chinery associated  with  that  of  the  League  of  Nations  to  further  this 
great  end.  They  recognize  that  difference  of  climate,  habits,  and 
customs  of  economic  opportunity  and  industrial  tradition  make  strict 
uniformity  in  the  conditions  of  labor  difficult  of  immediate  attain- 
ment. But,  holding  as  they  do,  that  labor  should  not  be  regarded 
merely  as  an  article  of  commerce,  they  think  that  there  are  methods 
and  principles  for  the  ratification  of  labor  conditions  which  all  indus- 
trial communities  should  endeavor  to  apply  so  far  as  their  special 
circumstances  will  permit. 

"Among  these  methods  and  principles,  the  following  seem  to  the 
High  Contracting  Parties  to  be  of  special  and  urgent  importance: 

"First.  The  guiding  principle  above  enunciated  that  labor  should 
not  be  regarded  merely  as  a  commodity  or  article  of  commerce. 

"Second.  The  right  of  association  for  all  lawful  purposes  by  the 
employed  as  well  as  by  the  employers. 

"Third.  The  payment  to  the  employed  of  a  wage  adequate  to 
maintain  a  reasonable  standard  of  Hfe  as  this  is  understood  in  their 
time  and  country. 

"Fourth.  The  adoption  of  an  eight  hours  day  or  a  forty-eight 
hours  week  as  the  standard  to  be  aimed  at  where  it  has  not  already 
been  obtained. 

"Fifth.  The  adoption  of  a  weekly  rest  of  at  least  twenty-four 
hours  which  should  include  Sunday  whenever  practicable. 

"Sixth.  The  abolition  of  child  labor  and  the  imposition  of  such 
limitations  on  the  labor  of  young  persons  as  shall  permit  the  con- 
tinuation of  their  education  and  assure  their  proper  physical  develop- 
ment. 

"Seventh.  The  principle  that  men  and  women  should  receive 
equal  remuneration  for  work  of  equal  value. 

"Eighth,  The  standard  set  by  law  in  each  country  with  respect  to 
the  conditions  of  labor  should  have  due  regard  to  the  equitable 
economic  treatment  of  all  workers  lawfully  resident  therein. 

*  From  Monthly  Labor  Review,  May,  1919,  U.  S.  Dept.  of  Labor. 


2i8     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

"Ninth.  Each  State  should  make  provision  for  a  system  of  in- 
spection in  which  women  should  take  part  in  order  to  insure  the  en- 
forcement of  the  laws  and  regulations  for  the  protection  of  the  em- 
ployed. 

"Without  claiming  that  these  methods  and  principles  are  either 
complete  or  final,  the  High  Contracting  Parties  are  of  opinion  that 
they  are  well  fitted  to  guide  the  policy  of  the  League  of  Nations  and 
that  if  adopted  by  the  industrial  communities  who  are  members  of 
League  and  safeguarded  in  practice  by  an  adequate  system  of  such 
inspection,  they  will  confer  lasting  benefits  upon  the  wage  earner  of 
the  world." 

National  War  Labor  Board  Principles 

PRINCIPLES  AND  POLICIES  TO  GOVERN  RELATIONS  BETWEEN  WORKERS 

AND  EMPLOYERS  IN  VvAR  INDUSTRIES  FOR  THE 

DURATION  OF  THE  WAR 

There  should  be  no  strikes  or  lockouts  during  the  war. 

EIGHT  TO  ORGANIZE 

The  right  of  workers  to  organize  in  trade-unions  and  to  bargain 
collectively  through  chosen  representatives  is  recognized  and  affirmed. 
This  right  shall  not  be  denied,  abridged,  or  interfered  with  by  the 
employers  in  any  manner  whatsoever. 

The  right  of  employers  to  organize  in  associations  or  groups  and 
to  bargain  collectively  through  chosen  representatives  is  recognized 
and  affirmed.  This  right  shall  not  be  denied,  abridged,  or  interfered 
with  by  the  workers  in  any  manner  whatsoever. 

Employers  should  not  discharge  workers  for  membership  in 
trade  unions,  nor  for  legitimate  trade  union  activities. 

The  workers,  in  the  exercise  of  their  right  to  organize,  should  not 
use  coercive  measures  of  any  kind  to  induce  persons  to  join  their  or- 
ganizations nor  to  induce  employers  to  bargain  or  deal  therewith. 

EXISTING  CONDITIONS 

In  establishments  where  the  union  shop  exists  the  same  shall 
continue,  and  the  union  standard  as  to  wages,  hours  of  labor,  and 
other  conditions  of  employment  shall  be  maintained. 

In  establishments  where  union  and  non-union  men  and  women 
now  work  together  and  the  employer  meets  only  with  employes  or 
representatives  engaged  in  said  establishments,  the  continuance  of 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      219 

such  conditions  shall  not  be  deemed  a  grievance.  This  declaration, 
however,  is  not  intended  in  any  manner  to  deny  the  right  or  dis- 
courage the  practice  of  the  formation  of  labor  unions  or  the  joining 
of  the  same  by  the  workers  in  said  establishments,  as  guaranteed  in 
the  preceding  section,  nor  to  prevent  the  War  Labor  Board  from 
urging  or  any  umpire  from  granting,  under  the  machinery  herein  pro- 
vided, improvement  of  their  situation  in  the  matter  of  wages,  hours 
of  labor,  or  other  conditions  as  shall  be  found  desirable  from  time 
to  time. 

Established  safeguards  and  regulations  for  the  protection  of  the 
health  and  safety  of  workers  shall  not  be  relaxed. 

WOMEN  IN  INDUSTRY 

If  it  shall  become  necessary  to  employ  women  on  work  ordinarily 
performed  by  men,  they  must  be  allowed  equal  pay  for  equal  work 
and  must  not  be  allotted  tasks  disproportionate  to  their  strength. 

HOURS  OF  LABOR 

The  basic  eight-hour  day  is  recognized  as  applying  in  all  cases 
in  which  existing  law  requires  it.  In  all  other  cases  the  question  of 
hours  of  labor  shall  be  settled  with  due  regard  to  governmental  neces- 
sities and  the  welfare,  health  and  proper  comfort  of  the  workers. 

MAXIMUM  PRODUCTION 

The  maximum  production  of  all  war  industries  should  be  main- 
tained and  methods  of  work  and  operation  on  the  part  of  employers 
or  workers  which  operate  to  delay  or  limit  production,  or  which  have 
a  tendency  to  artificially  increase  the  cost  thereof,  should  be  dis- 
couraged. 

MOBILIZATION   OF   LABOR 

For  the  purpose  of  mobilizing  the  labor  supply  with  a  view 
to  its  rapid  and  effective  distribution,  a  permanent  list  of  the  numbers 
of  skilled  and  other  workers  available  in  different  parts  of  the  country 
shall  be  kept  on  file  by  the  Department  of  Labor,  the  information 
to  be  constantly  furnished — 

1.  By  the  trade  unions. 

2.  By  State  employment  bureaus  and  Federal  agencies  of  like 
character. 

3.  By  the  managers  and  operators  of  industrial  establishments 
throughout  the  country. 

These  agencies  shall  be  given  opportunity  to  aid  in  the  distribu- 
tion of  labor  as  necessity  demands. 


2  20     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


CUSTOMS  OF  LOCALITIES 

In  fixing  wages,  hours,  and  conditions  of  labor,  regard  should 
always  be  had  to  tlie  labor  standards,  wage  scales,  and  other  condi- 
tions prevailing  in  the  localities  affected. 

THE   LIVING   WAGE 

1.  The  right  of  all  workers,  including  common  laborers,  to  a 
living  wage  is  hereby  declared. 

2.  In  fixing  wages,  minimum  rates  of  pay  shall  be  established 
which  will  insure  the  subsistence  of  the  worker  and  his  family 
in  health  and  reasonable  comfort. 

Resolution  No.  82  Offered  hy  C.  A.  Strickland  of  the 
Portland^  Ore.,  Central  Labor  Council.  {Failed 
of  adoption)  * 

Whereas,  The  only  soil  in  which  "dual  unions"  have  rooted  is 
the  attempted  monopolization  of  labor's  functionings  by  the  crafts, 
under  the  tutelage  of  the  American  Federation  of  Labor;  and 

Whereas,  An  aristocracy  of  union  labor  would  curse  the  world 
as  sorely  as  has  the  aristocracy  of  capitalism;  and 

Whereas,  By  the  introduction  of  modern  machinery,  one  unskilled 
man  is  enabled  to  render  a  large  number  of  skilled  mechanics  job- 
less; and 

Whereas,  Through  this  process  of  changing  the  methods  of  doing 
the  world's  work  it  is  not  far  amiss  to  state  that  "there  are  no  crafts 
at  the  present  stage  of  industrial  development";  and 

Whereas,  The  new  industrial  democracy  must  be  met  with  en- 
tirely new  plans  of  action  by  the  toilers;  be  it 

Resolved,  By  the  Thirty-ninth  Annual  Convention  of  the  Ameri- 
can Federation  of  Labor,  in  regular  session  assembled,  that  the  Gen- 
eral Executive  Board  proceed  at  once  to  formulate  a  plan  for  the 
reorganization  of  the  labor  movement,  to  change  from  the  craft-line 
plan  of  organization  to  one  being  based  on  the  plan  of  "industries"  or 
"plant  unions,"  making  all  working  cards  universally  interchangeable. 
To  empower  the  several  shop  committees,  representing  the  different 
classes  of  work  in  each  plant  to  form  a  general  shop  or  plant  com- 
mittee, invested  with  powers  to  legislate  in  all  matters  of  interest 
to  the  workmen  of  that  industry.  They  shall  act,  subject  to,  or 
not  in  conflict  with  their  District  Central  Councils,  which  councils 

*  Reprinted  by  permission  Excerpts  from  A.  F.  of  L.  Convention  Pro- 
ceedings, 1919. 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      221 

shall  co-operate  with  other  similar  councils,  through  and  by  State 
federated  bodies  consisting  of  delegates  from  the  District  Central 
Councils.  These  State  federated  bodies  to  be  bound  by  and  con- 
form to  the  general  constitution  of  the  reorganized  American  Federa- 
tion of  Labor. 

Resolved,  That  the  State  and  National  Federation  bodies  shall 
hold  annual  or  called  conventions  as  the  needs  and  welfare  of  labor's 
interests  shall  require. 

Samuel    Gompers,    American    Federation    of    Labor 
Convention^  1919: 

"Just  about  three  years  ago  I  conceived  the  idea  of  adopting  some- 
what of  a  catchy  phrase  that  might  help  to  induce  the  activity  of  our 
fellow  workers.  It  was  'Now  for  the  3,000,000  mark.'  The  report 
of  this  convention  shows  that  the  average  membership  of  our  affiliated 
unions  for  the  past  year  was  a  little  more  than  three  and  a  quarter 
million.  In  the  last  month  of  our  Federation  the  actual  membership 
on  which  per  capita  tax  was  paid  passed  the  figure  of  3,600,000.  The 
railroad  brotherhoods  have  made  their  application  to  the  American 
Federation  of  Labor,  and  when  that  is  accomplished  we  will  have 
passed  the  4,000,000  mark." 

John  Fitzpatrich,  Organizer  of  Steel  Trades: 

"It  would  take  too  long  to  describe  the  tactics  adopted  to  harass 
our  meetings  and  prevent  us  from  exercising  our  common,  everyday 
citizenship  right.  We  had  meetings  in  Pittsburgh,  where  the  men 
had  to  go  through  a  line  of  two  hundred  thugs,  plug-uglies  and 
blacklegs  employed  by  the  steel  trust  for  the  purpose  of  terrorizing 
and  browbeating  the  men  in  the  steel  industry.  In  spite  of  that  we 
went  on  with  our  work. 

"At  Homestead  there  was  a  small  strike  of  the  machinists.  We 
went  into  Homestead  and  held  the  first  open  mass-meeting  that  had 
ever  been  held  in  that  city  in  twenty-seven  years.  After  that  meet- 
ing was  held,  other  arrangements  we  had  made  to  organize  there 
were  stopped ;  halls  we  had  rented,  arrangements  we  had  made  to  or- 
ganize were  denied  us;  the  owners  who  had  accepted  our  money  for 
rent  of  the  halls  had  to  return  it,  and  when  they  could  not  use 
excuses  of  that  kind  the  health  departments  at  these  various  towns 
were  used  to  prevent  the  committee  from  holding  meetings. 

"We  went  to  a  place  called  JNIonessen,  and  rented  a  hall.  The 
money  was  returned  and  we  were  given  to  understand  that  meetings 


2  22      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

could  not  be  held  in  that  town.  Across  the  river  from  Monessen  is 
a  little  town  called  Charleroi,  where  a  number  of  miners  have  their 
organization.  When  the  miners  held  their  eight-hour  day  celebration 
on  the  first  of  April,  they  went  over  the  river  to  Monessen  and 
held  their  meeting 

A  town  nearby  was  so  under  the  influence  of  the  steel  combina- 
tion that  not  only  were  the  employers  of  the  steel  trust  intimidated 
but  they  undertook  to  use  their  influence  to  intimidate  the  business 
men.  The  business  m.en  were  forced  to  sign  a  petition  asking  thi 
working  men  not  to  join  the  organization,  and  to  declare  that  their 
conditions  in  those  slave-pens  were  satisfactory  to  them 

In  McKeesport  we  arranged  meetings  and  met  v^^ith  the  same 
kind  of  opposition.  We  were  denied  the  right  to  meet  in  the  street, 
in  halls,  or  anywhere  else 

If  we  break  the  opposition  of  the  steel  trust  the  real  opposition  to 
the  labor  movement  of  this  country  will  be  removed.  That  is  the 
one  big  thing,  if  nothing  eke  is  to  be  obtained  in  this  work.  We  hope 
to  be  able  to  accomplish  that;  and  it  is  possible  of  accomplishment. 
There  are  about  a  half  a  million  men  connected  with  the  iron  and 
steel  industry;  a  large  portion  of  them  are  mechanics,  but  the  great 
majority  of  them  are  common  laborers.  I  presume  if  our  skilled 
trades  would  proceed  to  make  arrangements  with  the  steel  industry 
v/e  could  very  readily  bring  within  our  lives  all  that  we  desire,  but  in 
doing  that  we  would  have  to  pay  the  price  of  leaving  that  common 
labor  which  is  in  the  majority,  to  the  future  mercy  of  the  steel  trust. 
That  price  we  will  never  pay;  never. 

In  the  ten  months  since  this  committee  was  created  a  hundred 
thousand  men  have  been  brought  into  the  folds  of  our  organization. 
If  that  result  can  be  brought  about  in  ten  months  we  shall  be  able, 
through  the  concentrated  efforts  of  the  international  organizations 
and  with  the  support  of  the  American  Federation  of  Labor,  to  bring 
the  other  four  hundred  thousand  men  in  the  steel  industry  into  the 
labor  movement  inside  of  the  next  year.  That  is  the  constructive 
work  we  have  been  engaged  in,  and  I  hope  when  you  leave  this  con- 
vention, with  all  the  other  responsibilities  and  duties  you  have,  you 
will  help  this  situation.  It  is  a  vital  and  important  matter  and 
means  much  to  the  future  of  the  labor  movement." 


3.    LABOR  AND  THE  BENCH 

Unanimous  Recommendations  of  the  A.  F,  of  L.  on  the 
Powers  of  the  Judiciary  * 

A  year  ago  the  convention  of  the  American  Federation  of  Labor 
was  advised  of  the  great  danger  involved  in  this  case  [Coronado 
Coal  Co.  vs.  United  Mine  Workers]  and  that  by  the  final  affirma- 
tion of  this  judgment,  the  right  to  strike  was  not  only  outlawed, 
but  that  the  right  of  the  workers  to  combine  and  to  bargain  col- 
lectively were  likewise  seriously  attacked.  Attention  was  directed 
to  the  fact  that  this  assault  and  encroachment  on  the  right  of  trial 
by  jury  was  a  flagrant  disregard  of  constitutional  safeguards  to  the 
freedom  of  action  guaranteed  our  people. 

At  that  time  we  sought  to  impress  the  convention  with  the  dan- 
gerous principle  which  the  court  had  invoked  to  attack  the  funds 
of  trade  unions,  to  jeopardize  the  savings  of  the  wage  earners,  and 
thus  ultimately  destroy  the  virility  and  aggressiveness  of  the  trade 
union  movement. 

We  are  now  advised  by  the  Executive  Council  that  the  appeal  of 
the  United  Mine  Workers  in  the  District  Court  has  been  in  vain  and 
that  the  misjudgment  of  the  lower  court  has  been  affirmed.  While  the 
United  Mine  Workers  are  preparing  an  appeal  to  the  Supreme 
Court  of  the  United  States.  ...  it  is  ...  .  important  to  note 
that  the  tendency  of  the  employing  interests  to-day  is  to  hold  the 
trade  unions  responsible  financially  for  whatever  alleged  ill-advised 
or  wrongful  act  any  one  of  its  members  or  sympathizers  may  commit, 
inadvertently  or  by  design,  on  the  theory  that  the  trade  union 
movement  is  obligated  to  discipline  and  to  direct  the  conduct  of  all 
its  members. 

Our  organization  of  law  presents  indeed  a  mass  of  inconsistencies 
and  contradictions.  While  organizations  of  capital  are  encouraged 
and  protected,  combinations  of  workers  are  constantly  attacked. 
While  employers  may  unite  and  combine  against  workers  and  against 
the  buying  public,  the  right  of  the  workers  to  resist  encroachments 
and  to  right  admitted  wrongs  is  constantly  being  interfered  with. 
Whenever  an  officer  of  an  incorporated  financial,  indus- 

*  Reprinted  by  permission  from  A.  F.  of  L.  Convention  Proceedings, 
1919. 

222 


224      CURRENT  SOCIAL  A>TD  INDUSTRIAL  FORCES 

trial  or  commercial  enterprise  exceeds  the  power  specifically  delegated 
to  him,  the  courts  declare  his  act  ultra  vires  and  the  company  is 
absolved  from  all  responsibility.  But  when  a  labor  man  at  a  trade 
union  meeting  makes  utterances  which  are  condemned  by  those  in 
authority,  .  .  .  then  the  union  and  its  members  may  nevertheless 
be  robbed  of  their  funds  and  savings.  Such  is  the  awkward  con- 
tradiction in  our  administrative  law  of  to-day. 

It  was  the  spirit  of  the  jurisprudence  of  slavery  which  forbade 
the  slaves  the  opportunity  to  read  to  defend  themselves,  and  so  it 
is  the  jurisprudence  of  employers  of  to-day  to  contrive  doctrines 
which  deny  the  workers  a  full  opportunity  of  defense.  The  time 
has  passed,  however,  when  our  courts  should  be  longer  permitted  to 
devise  legal  doctrines  and  design  local  fictions  by  which  to  deny 
the  wage  earners  equal  rights  and  privileges  before  the  law 

.  .  .  The  power  of  our  courts  to  declare  legislation  unconstitu- 
tional and  void  is  a  most  flagrant  usurpation  of  power  and  authority 
by  our  courts  and  is  a  repudiation  and  denial  of  the  principle  of  self- 
government  recognized  now  as  a  world  doctrine.  The  continued  ex- 
ercise of  this  unwarranted  power  is  a  blasphemy  on  the  rights  and 
claims  of  free  men  of  America. 

This  usurpation  of  power  by  our  courts  to  subordinate  the  legis- 
lative and  executive  departments  to  their  will  and  compel  the  ac- 
tivities of  a  free  people  to  their  whims  and  dictates  is  parallelled 
and  equalled  only  by  the  further  usurpation  of  authority  by  our 
courts  to  legislate  and  punish  people  in  direct  defiance  of  constitu- 
tional safeguards  to  personal  liberty  and  freedom  of  action.  By  the 
issuance  of  injunctive  decrees  of  our  courts,  by  the  restraint  they 
place  upon  the  normal  and  rightful  activities  of  a  free  people,  by  the 
punishing  of  free  men  in  the  exercise  of  their  constitutional  rights 
without  opportunity  to  a  trial  by  jury,  by  the  removal  of  safe- 
guards thrown  around  the  individual  against  extreme  and  excessive 
punishments  and  the  denial  of  an  opportunity  for  executive  clemency, 
our  courts  have  vested  themselves  Vvith  a  power  greater  than  any 
despot  heretofore  possessed. 

The  fate  of  the  sovereignty  of  the  American  people  hangs  in  the 
balance.  It  is  inconceivable  that  such  an  autocratic,  despotic  and 
tyrannical  power  can  long  remain  in  a  democracy. 

Robert  F.  Hoxie:  Trade  Unionism  in  the  United 
States*  (pp.  228,  234-37,  245,  249) 

Combinations  of  workers  in  trade  unions  for  the  purpose  of 

affecting  the  wage  rate  and  conditions  of  employment,  are,  as  such, 

*  Copyright,  1917,  by  D.  Appleton  and  Company.     Reprinted  by  permis- 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      225 

lawful.  Unions  in  themselves  are  lawful  so  long  as  they  do  no 
unlawful  acts,  i.e.,  the  combination  for  lawful  purposes  is  not  un- 
lawful. But  no  man  can  lawfully  surrender  his  rights,  and  the 
unions  are  lawful  only  so  long  as  they  do  not  infringe  on  the  rights 
of  their  members,  other  laborers,  employers,  or  society.  This  im- 
plies that  they  do  not  interfere  with  the  right  of  any  worker  to 
refuse  union  membership,  to  violate  union  rules,  to  work  where, 
when,  for  whom,  for  what,  and  under  what  conditions,  if  lawful, 
he  pleases;  or,  with  the  right  of  the  employers  to  hire  whom  they 
will,  refuse  to  hire  union  men  exclusively,  discharge  at  will,  trade 
with  whom  they  will;  that  they  do  not  appear  to  the  courts  to  re- 
strain trade  in  any  way;  that  their  intent  is  not  to  do  any  of  these 
things,  and  that  they  do  not  attempt  to  enforce  any  of  these  things 
by  any  act  that  may  be  interpreted  by  the  courts  as  constituting 
intimidation,  coercion,  or  violence,  or  threats  thereof.  But  unions, 
being  restraining  combinations,  may,  with  the  greatest  facility,  be- 
come in  their  actions,  combinations  in  illegal  restraint  of  trade.  As 
our  law  fundamentally  was  conceived  for  an  individualistic  society, 
in  an  era  when  the  competitive  ideal  was  uppermost,  and  among 
its  main  purposes  are  therefore  the  protection  of  freedom  of  individ- 
ual contract,  freedom  of  trade,  free  industrial  action  of  individuals 
and  property  right,  and  as  the  aim  of  the  unions  is  to  protect  their 
members  against  the  effects  of  these  things,  and  their  main  policies 
are  directed  against  them,  the  legality  of  unions  tends  to  mean  little 
in  fact.  As  such,  they  are  legal,  but  as  soon  as  they  function,  they 
easily  become  lawless. 

In  the  practical  application  of  the  injunction,  the  courts  appear 
inclined  to  consider  almost  anything  as  a  property  right  and  almost 
any  act  of  strikers  a  possible  irreparable  violation  of  property  right. 
Thus,  while  injunctions  will  not  issue  to  restrain  libel  or  slander  they 
will  restrain  the  use  of  unfair  lists,  boycott  notices,  and  the  like, 
considered  as  intimidating  or  coercive.  In  practice,  injunctions  may 
issue  to  cover  almost  any  human  act  which  the  court  may  deem 
productive  of  irreparable  injury  to  property.  For  instance,  in  the 
Buck's  Stove  and  Range  case,  the  injunction  prohibited  the  officers 
of  the  American  Federation  of  Labor,  officers  and  members  of  affili- 
ated unions,  agents,  friends,  sympathizers,  counsel,  conspirators 
and  co-conspirators  from  making  any  reference  whatever  to  the  fact 
that  the  Buck's  Company  had  ever  been  in  any  dispute  with  labor, 
or  to  the  fact  that  the  Company  had  ever  been  regarded  as  unfair, 
had  ever  been  on  any  unfair  list,  or  on  a  "we  don't  patronize"  list  of 
the  American  Federation  of  Labor  or  of  any  other  organization,  and 
also  prohibited  any  person  from  either  directly  or  indirectly  referring 
to  any  such  controversy  by  printed,  written  or  spoken  word.  .... 


226     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

The  law,  as  interpreted  by  the  courts,  is  in  effect  a  series  of 
logical  deductions  from  a  set  of  basic  premises  or  principles.  When 
it  fails  to  satisfy  the  demands  of  justice  it  is  not  usually  because  the 
court  is  biased  but  because  logical  deductions  from  a  set  of  fixed  ab- 
solutistic  principles  cannot  meet  the  needs  of  developing  social  ideals 
and  relationships.  In  general,  the  courts  through  their  unchallenged 
right  to  interpret  the  meaning  and  constitutionality  of  law  which  is 
based,  as  we  have  seen,  first,  on  the  assumiption  of  a  natural  order 
and  absolute  natural  rights,  as  expressed  in  the  common  law,  which 
is  itself  a  creation  of  the  courts,  and  as  confirmed  by  written  con- 
stitutions, have  much  more  actual  power  in  determining  the  rights 
and  legal  status  of  labor  and  the  employers  than  the  legislatures  and 
the  people. 

The  law,  in  so  far  as  it  assumes  to  represent  the  essence  of  posi- 
tive justice  but  reflects  the  relations  of  handicraft  industry,  has 
no  comprehension  of  modern  industrial  conditions,  nor  of  their 
inevitable  consequences,  and  no  modes  of  dealing  with  them  except 
by  prohibition.  It  has  no  comprehension  of  a  machinery  for  dealing 
out  justice  in  a  state  of  society  changed  and  changing  from  that  in 
which  it  was  conceived.  Being  actually  unable  to  outlaw  combina- 
tion, for  industrial  forces  are  more  compelling  than  legal  restraint, 
not  being  wholly  uncognizant  of  the  injustice  worked  by  its  arbitrary 
decrees,  but  unable  to  give  up  its  pre~revolutionary  standpoint,  it  is 
obliged  to  seek  actual  justice  by  shuffling,  halting,  roundabout  meth- 
ods and  disingenuous  distinctions  which  vary  with  the  intelligence  and 
bias  of  the  particular  courts.  As  the  law  in  spirit  is  individualistic, 
as  it  makes  the  freedom  and  sacredness  of  individual  contract  the 
t£>uchstone  of  absolute  justice,  and  as  the  unions  are  formed  to 
escape  the  evils  of  individualism  and  individual  competition  and  con- 
tract, and  all  the  union  acts  in  positive  support  of  these  purposes 
do  involve  coercion,  the  law  cannot  help  being  in  spirit  inimical 
to  unionism.  Unionism  is  in  its  very  essence  a  lawless  thing,  in  its 
very  spirit  and  purpose  a  challenge  to  the  law.  Hence,  even  where 
the  judges  are  understanding  and  intend  to  be  sympathetic  to  union- 
ism, if  they  are  true  to  the  law  they  must  tend  to  be  unfair  to 
unionism 

The  fundamental  assumptions  and  framework  of  our  present 
law  are  an  eighteenth  century  product.  They  developed  partly  as 
a  reaction  against  a  previous  restrictive  legal  system  which  had  out- 
lived its  workability  and  partly  in  response  to  a  new  social  philosophy 
which  attained  definite  form  and  acceptance  during  the  eighteenth 
century.  They  were  pragmatically  true  for  the  time  of  their  develop- 
ment, i.e.,  they  harmonized  with  the  general  thought  of  the  period 
and  they  fitted  the  conditions  and  needs  of  the  economic  situation. 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      227 

Hardly  had  they  been  established,  however,  when  the  industrial  rev- 
olution created  a  new  economic  situation  which  made  them  prag- 
matically false  in  their  application,  i.e.,  unjust  and  socially  vicious. 
Somewhat  later  a  new  social  philosophy  developed  with  which  they 
are  entirely  out  of  harmony.  They  persist,  therefore,  mainly 
by  force  of  social  tradition.  The  new  economic  condition  and  the 
new  social  philosophy  are  bound  gradually  to  displace  them  and 
create  a  new  legal  basis  and  framework  adapted  to  the  new  situation. 


The  eighteenth  century  philosophy  of  Europe  was  taken  over 
by  America  and  crystallized  in  written  constitutions.  The  Consti- 
tution of  the  United  States  is  based  definitely  on  the  notions  of 
natural  order  and  natural  rights.  The  natural  rights  which  it  es- 
pecially guarantees  are  the  right  to  property  and  the  equal  protection 
of  the  laws.  The  notion  that  government  should  keep  hands  off 
industrial  affairs  and  relations,  and  that  free  contract  is  the  touch- 
stone of  social  and  individual  well-being,  was  adopted  without  ques- 
tion by  the  American  courts.  These  rights  of  the  individual  employer 
and  worker,  intrenched  by  constitutional  private  property  guar- 
antees, thus  became  in  America  the  basis  of  industrial  law. 

Henry  R.  S eager:  Bias  of  the  Courts*  (p.  52) 

I  don't  see  how  any  fair  minded  person  can  question  but  what  our 
judges  have  shown  a  decided  bias  in  favor  of  the  employers.  I 
would  not  be  inclined  to  ascribe  this  so  much  to  a  class  bias,  although 
I  think  this  is  a  factor,  as  to  the  antecedent  training  of  judges. 
Under  our  legal  system  the  principal  task  of  the  lawj^er  is  to  protect 
property  rights,  and  the  property  rights  have  come  to  be  concentrated 
more  and  more  in  the  hands  of  corporations,  so  that  the  successful 
lawyer  of  to-day,  in  a  great  majority  of  cases,  is  the  corporation 
lawyer.  His  business  is  to  protect  the  rights  of  employers  and 
corporations.  It  is  from  the  ranks  of  successful  lawyers,  for  the 
most  part,  that  our  judges  are  selected,  and  from  that  reults  in- 
evitably a  certain  angle  on  the  part  of  a  majority  of  our  judges. 

Judge  Walter  Clark,  Chief  Justice  of  the  Supreme  Court  of  North 
Carolina,  also  testified  before  the  Commission  as  follows: 

Chairman  Walsh.  Have  you  studied  the  effect  of  the  use  of 
injunctions  in  labor  disputes  generally  in  the  United  States,  as  a 
student  of  economics  and  the  law? 

Judge  Clark.    I  do  not  think  they  can  be  Justified,  sir, 

(Their  effect)  has  been,  of  course,  to  irritate  the  men,  because  they 

*  Final  Report  Federal  Commission  on  Industrial  Relations,  1915. 


228      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

feel  that  in  an  Anglo-Saxon  community  every  man  has  a  right  to  a 
trial  by  jury  and  that  to  take  him  up  and  compel  him  to  be  tried  by 
a  judge,  is  not  in  accordance  with  the  principles  of  equality,  liberty 
and  justice. 

Thomas  Reed  Powell:  Collective  Bargaining  before  the 
Supreme  Court  (pp.  396-429) 

In  three  important  cases  a  majority  of  the  United  States  Supreme 
Court  has  thwarted  efforts  of  labor  unions  to  increase  their  numbers. 
In  all  three  there  was  vigorous  dissent.  All  three  were  opposed  to 
the  judgment  of  the  court  below.  The  first  two  found  statutes  want- 
ing in  the  requirements  of  due  process  of  law.  Adair  v.  United 
States  annulled  an  Act  of  Congress  which  prohibited  interstate  car- 
riers from  discharging  an  employe  because  of  his  membership  in  a 
labor  union.  Coppage  v.  Kansas  declared  invalid  a  state  law  which 
forbade  any  employer  to  require  of  employes  or  of  persons  seeking 
employment  an  agreement  not  to  become  or  remain  a  member  of  a 
labor  union.  The  third  decision  is  Hitchman  Coal  and  Coke  Com- 
pany v.  Mitchell  et  al.,  handed  down  last  December.  It  deals  with 
a  situation  created  by  the  t5q3e  of  agreement  which  Kansas  sought 
unsuccessfully  to  forbid.  Of^cers  of  a  labor  union  were  restrained 
by  injunction  from  securing  secret  promises  to  join  the  union  from 
employes  who  had  agreed  to  relinquish  their  employment  in  case 
they  became  members. 

Each  of  these  decisions  was  rendered  in  the  name  of  freedom 
and  liberty.  But  since  each  dealt  with  conflicting  interests,  each 
necessarily  involved  interfering  with  liberty  as  well  as  protecting  it. 
The  majority  judges  of  the  Supreme  Court  must  have  thought  that 
the  liberty  they  safeguarded  was  for  some  reason  entitled  to  more 
consideration  than  the  liberty  they  curtailed.  And  the  minority  and 
the  judges  below  must  have  held  contrary  views.  The  importance 
of  the  decisions  and  of  the  court  which  rendered  them  may  make 
it  profitable  to  review  the  various  opinions  and  try  to  arrange  the 
controlling  reasons  for  the  divergent  views.  In  so  far  as  the  opin- 
ions do  not  lend  themselves  to  this  purpose,  an  endeavor  will  be  made 
to  indicate  the  fact.  It  not  infrequently  happens  that  a  judicial 
opinion,  like  the  arguments  of  counsel,  starts  from  a  selected  premise 
which  has  in  it  the  seeds  of  a  desired  result,  and  neglects  to  weigh 
that  premise  in  even  scales  against  competing  premises  which  are 
equally  significant  but  which  bear  other  fruit. 

♦  Reprinted  by  permission  from  Political  Science  Quarterly,  September, 
1918,  Volume  XXXIII. 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      229 

Only  four  of  the  judges  sat  in  all  three  cases.  Of  these  Chief 
Justice  White  was  consistently  with  the  majority,  and  Mr.  Justice 
Holmes  with  the  minority.  Mr.  Justice  McKenna  was  with  the 
majority  in  the  Coppage  case  and  the  Hitchman  case,  and  with  the 
minority  in  the  Adair  case.  Mr,  Justice  Day  dissented  in  the  Cop- 
page  case  and  concurred  in  the  other  two.  Justices  Pitney,  Van 
Devanter  and  Mc Reynolds  sat  in  the  Coppage  case  and  the  Hitchman 
case  and  concurred  in  both.  With  them  in  the  Coppage  case  was  Mr. 
Justice  Lamar;  against  them,  Mr.  Justice  Hughes.  Chief  Justice 
Fuller  and  Justices  Harlan,  Peckham,  and  Brewer  completed  the 
majority  in  the  Adair  case;  and  Justices  Brandeis  and  Clarke,  the 
minority  in  the  Hitchman  case. 


The  Adair  case  involved  no  dispute  as  to  the  facts,  as  the 
respondent  by  demurring  to  the  indictment  confessed  that  he  had 
discharged  an  employe  of  an  interstate  railroad  because  of  his  mem- 
bership in  a  labor  union.  The  sole  issue  before  the  court  was  the  con- 
stitutionality of  the  statute  forbidding  such  discharge.  And  the 
opinion  of  Mr.  Justice  Harlan  maintained  its  unconstitutionality  by 
asserting  it. 

Adair  was  an  agent  of  the  carrier.  'Tt  was  his  right,"  says  the 
learned  justice,  "and  that  right  inhered  in  his  personal  liberty,  and 
was  also  a  right  of  property,  to  serve  his  employer  as  best  he  could, 
so  long  as  he  did  nothing  that  was  reasonably  forbidden  by  law  as 
injurious  to  the  public  interests."  This  seems  a  prelude  to  a  con- 
sideration of  the  question  of  reasonableness.  But  we  are  not  thus 
favored.  Instead  we  are  informed  again  that  "it  was  the  right  of 
the  defendant  to  prescribe  the  terms  upon  which  the  services  of 
Coppage  (the  employee)  would  be  accepted,  and  it  was  the  right  of 
Coppage  to  become  or  not,  as  he  chose,  an  employe  of  the  railroad 
company  upon  the  terms  offered  him." 

This  describes  the  legal  situation  before  the  passage  of  the 
statute.  The  parties  were  at  liberty  to  bargain  as  they  pleased 
about  the  affiliation  of  the  employe  with  a  union.  But  what  we  need 
to  know  is  why  the  legal  situation  created  or  sanctioned  by  the  com- 
mon law  cannot  be  changed  by  statute.  We  do  not  gain  light  on 
this  point  from  any  recital  of  the  rights  of  the  parties  at  common 

law,  however  oft  repeated The  succeeding  paragraph 

in  the  opinion  takes  us  no  further  in  our  quest.  It  cites  Lochner  v. 
New  York,  and  says  that  all  the  court  were  agreed  "as  to  the  general 
proposition  that  there  is  a  liberty  of  contract  that  cannot  be  un- 
reasonably interfered  with  by  legislation.'  Next  follows  the  conces- 
sion that  the  "right  of  liberty"  is  subject  to  "such  reasonable  re- 


230      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

straints  as  the  common  good  or  general  welfare  may  require."  But 
tMs  is  succeeded,  not  by  a  discussion  of  the  question  of  reasonable- 
ness, but  by  a  neglect  of  it.  Note  the  significant  silence  on  the 
controlling  issue: 

...  It  is  not  within  the  functions  of  government — at  least  in 
the  absence  of  contract  between  the  parties — to  compel  any  person, 
in  the  course  of  his  business,  and  against  his  will,  to  accept  or  re- 
tain the  personal  services  of  another. 

After  reiterating  again  the  common-law  rights  of  the  employer 
and  of  the  employe,  the  opinion  continues: 

In  all  such  particulars  the  employer  and  the  employe  have 
equality  of  right,  and  any  legislation  that  disturbs  that  equality  is 
an  arbitrary  interference  with  the  liberty  of  contract  which  no  gov- 
ernment can  legally  justify  in  a  free  land. 

There  is  more  to  the  same  effect.  Summing  it  up,  the  statute  is 
unconstitutional  because  it  is  unconstitutional. 

It  is  not  surprising  that  such  an  avoidance  of  the  question  of 
reasonableness  prompts  Mr.  Justice  McKenna  to  open  his  dissent  by 
saying: 

The  opinion  of  the  court  proceeds  upon  somewhat  narrow  lines 
and  either  omits  or  does  not  give  adequate  prominence  to  the  con- 
siderations which,  I  think,  are  determinative  on  the  questions  in 
the  case.  And  later  he  suggests  that  an  inquiry  be  made  as  to  the 
purpose  of  the  legislation,  "without  beating  about  in  the  abstract." 

This  purpose  Mr.  Justice  McKenna  finds  in  the  other  provisions 
of  the  statute  setting  forth  a  plan  of  arbitration  to  prevent  the  strikes 
which  are  apt  to  arise  from  disputes  between  employers  and  em- 
ployed. The  unions  among  railroad  employes,  he  says,  exist,  and  are 
a  fact  to  be  reckoned  with.  They  create  a  unity  among  employes 
which  may  be  an  obstacle  or  an  aid  to  arbitration.  Congress  sought 
to  make  this  unity  an  aid  in  the  settlement  of  labor  disputes.  The 
requirement  is  therefore  in  the  public  interest.  It  is  imposed  only  on 
those  engaged  in  a  public  service  enterprise,  who  are  subject  to 
control  in  the  interest  of  the  public.  With  the  rights  of  those  engaged 
in  private  business  "we  are  not  concerned." 

Mr.  Justice  McKenna  therefore  finds  the  restriction  on  the  liberty 
of  the  carriers  a  reasonable  one,  because,  accepting  conditions  as 
they  are,  it  \\ill  tend  to  prevent  strikes.  Mr.  Justice  Harlan  dis- 
misses this  alleged  justification  in  a  somewhat  roundabout  way.  He 
enters  upon  the  question  in  order  to  discover  whether  the  act  is  a 
regulation  of  interstate  commerce.  This  is  in  response  to  some  argu- 
ment which  he  calls  a  suggestion  that  the  act  "can  be  referred  to 
the  power  of  Congress  to  regulate  interstate  commerce,  without  any 
regard  to  any  question  of  personal  liberty  or  right  of  property  under 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      231 

the  Fifth  Amendment."  If  the  argument  was  put  in  this  way,  it 
confused  two  distinct  questions.  The  opinion  recognizes  this  when 
it  says  later  that  the  power  over  commerce  "cannot  be  exerted 
in  violation  of  any  fundamental  right  secured  by  other  provisions 
of  the  Constitution."  And  if  the  act  is  not  a  regulation  of  inter- 
state comm.erce,  it  is  unconstitutional,  even  if  it  does  not  also  violate 
the  Fifth  Amendment.  So  that  the  majority,  by  holding  that  the 
objects  of  the  statute  are  not  within  the  purview  of  the  commerce 
power,  avoid  explicit  analysis  of  the  reasons  adduced  by  the  minority 
for  the  reasonableness  of  its  interference  with  liberty. 

Mr.  Justice  Holmes  looks  deeper.  The  statute,  he  finds, 
"simply  prohibits  the  more  powerful  party  to  exact  certain 
undertakings,  or  to  threaten  dismissal  or  imjustly  discrimi- 
nate on  certain  grounds  against  those  already  employed."  If 
there  is  believed  to  be  an  important  ground  for  the  restraint,  "the 
Constitution  does  not  forbid  it,  whether  the  court  agrees  or  dis- 
agrees with  the  policy  pursued."  Mr.  Justice  Holmes  does  not  con- 
fine his  sanction  to  the  object  of  preventing  strikes.  Though  hs 
thinks  that  laboring  men  are  apt  to  attribute  to  unions  advantages 
"that  really  are  due  to  economic  conditions  of  a  wider  and  deeper 
kind,"  he  saj's  that  he  "could  not  pronounce  it  unwarranted  if  Con- 
gress should  decide  that  to  foster  a  strong  union  was  for  the  best 
interest,  not  only  of  the  men,  but  of  the  railroads  and  the  country 
at  large."  And  his  conclusion,  which  he  puts  at  the  beginning  of  his 
opinion,  is  stated  as  follovv^s:  "I  also  think  that  the  statute  is  con- 
stitutional, and,  but  for  the  decision  of  miy  brethren,  I  should  have 
felt  pretty  clear  about  it." 

So  much  for  the  arguments  of  the  judges.  Mr.  Justice  Holmes 
sees  the  issue  as  one  of  policy  which  it  is  for  Congress  to  decide.  The 
majority  find  some  eternal  right  of  the  carrier  to  be  left  alone,  against 
which  Congress  beats  in  vain.  They  build  this  right  on  the  common- 
law  right  of  the  carrier  to  be  immune  from  dangers  if  it  dismissed 
an  employe  because  he  was  a  member  of  a  union.  But  this  common- 
law  right  was  a  judicial  creation  with  respect  to  an  issue  between  man 
and  man.  The  issue  in  the  Adair  case  is  one  between  man  and  the 
government.  The  new  right  of  the  carrier  discovered  by  the  Adair 
case  is  wholly  different  from  that  which  it  had  at  common  law. 
An  immunity  against  an  individual  has  been  enlarged  into  an  im- 
munity against  the  government.  Yet  the  court  seems  to  think  that 
it  is  merely  protecting  an  old  right,  and  not  creating  a  new  one. 
Thus  it  avoids  giving  any  substantial  reason  for  its  decision. 

The  majority  recognizes  that  the  issue  before  the  court  is  one  of 
reasonableness.  The  merit  of  its  opinion  depends,  therefore,  upon 
its  discussion  of  that  issue.    Legislatures  are  fortunate  in  not  being 


232      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

called  upon  to  give  reasons  for  the  law  they  make.  Courts  are  under 
a  duty  to  give  weighty  and  specijEic  reasons  before  they  unmake  the 
law  made  by  the  legislature.  They  may  not  inappropriately  be  held 
subject  to  the  canon  that  the  vigorous  assertion  of  a  conclusion  is 
not  the  giving  of  a  reason  for  it.  Judged  by  this  canon,  the  majority 
opinion  in  the  Adair  case  is  sadly  wanting.  Its  declaration  that  it 
is  not  within  the  functions  of  government  to  compel  a  person  against 
his  will  to  retain  the  services  of  another,  is  beside  the  point,  because 
Congress  did  not  compel  the  carrier  to  retain  the  services  of  any  of  its 
employes.  There  is  a  wide  difference  between  prohibiting  discharge 
for  a  single,  specified  reason,  and  prohibiting  discharge  altogether. 
The  court  cannot  convince  us  of  the  unreasonableness  of  what  Con- 
gress did,  by  telling  us  that  it  is  not  within  the  functions  of  govern- 
ment to  do  something  miore  drastic.  It  does  not  enlighten  us  on  the 
question  of  reasonableness  by  the  rhetorical  fiat  that  "the  employer 
and  the  employe  have  equality  of  right,  and  any  legislation  that  dis- 
turbs that  equality  is  an  arbitrary  interference  with  liberty  of  con- 
tract which  no  government  can  justify  in  a  free  land."  Yet  it  is 
on  this  fiat  that  the  decision  rests,  and  not  on  anything  that  can  be 
dignified  with  the  title  of  reason. 

II 

The  question  of  the  disturbance  of  equality  between  employer 
and  employed  receives  further  discussion  in  the  opinions  in  the 
Coppage  case.  The  majority  in  that  case  insist  that  a  statute  which 
forbids  an  employer  to  require  of  a  laborer,  as  a  condition  of  obtain- 
ing or  remaining  in  employment,  an  agreement  not  to  become  or  re- 
main a  member  of  a  labor  union,  is  as  vicious  as  one  which  forbids 
dismissal  because  of  membership  in  a  union.  If  the  employer  must 
remain  free  to  discharge  an  employe  for  any  reason  that  seems  to  him 
good,  he  must  be  permitted  to  announce  in  advance  what  reasons 
he  will  deem  sufficient  for  discharge.  "Granted  the  equal  freedom  of 
both  parties  to  the  contract  of  employment,  has  not  each  party  the 
right  to  stipulate  upon  what  terms  only  he  will  consent  to  the  incep- 
tion or  to  the  continuance,  of  that  relation?"  ....  In  a  dissent 
which  takes  only  a  paragraph  he  (Mr.  Justice  Holmes)  says: 

In  present  conditions  a  workman  not  unnaturally  may  believe 
that  only  by  belonging  to  a  union  can  he  secure  a  contract  that 
shall  be  fair  to  him.  If  that  belief,  whether  right  or  wrong,  may  be 
held  by  a  reasonble  man,  it  seems  to  me  that  it  may  be  enforced 
by  law  in  order  to  establish  the  equality  of  position  between  the 
parties  in  which  liberty  of  contract  begins.  \\^ether  in  the  long 
run  it  is  wise  for  the  workingman  to  enact  legislation  of  this  sort 
is  not  my  concern,  but  I  am  strongly  of  the  opinion  that  there  is 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      233 

nothing  in  the  Constitution  of  the  United  States  to  prevent  it.  .  .  . 

Thus  Mr.  Justice  Holmes  regards  the  statute  as  a  promoter  of 
liberty  and  equality.  The  minority  regard  it  as  an  interference  with 
both.  This  is  not  to  say  that  they  disagree  as  to  the  results  the  law 
ought  to  produce.  Their  difference  relates  to  the  characterization 
of  those  results.  It  goes  to  the  essence  of  what  each  means  by  liberty 
and  equality. 

To  the  minority  liberty  and  equality  mean  something  actual  and 
concrete.  Mr.  Justice  Day  says  of  the  Kansas  statute:  'T  think 
that  the  act  now  under  consideration,  and  kindred  ones,  are  intended 
to  promote  the  same  liberty  of  action  for  the  employe,  as  the 
employer  confessedly  enjoys."  It  is  a  step  toward  making  them  equal 
in  bargaining  power.  It  prohibits  "coercive  attempts"  on  the  part 
of  employers  to  deprive  employes  "of  the  free  right  of  exercising 
privileges  which  are  theirs  within  the  law."  To  the  argument  of  the 
majority  that  there  is  no  element  of  coercion  in  offering  an  employe 
a  choice  between  his  union  and  his  job,  Mr.  Justice  Day  says  that 
this  neglects  the  facts  as  to  the  relative  positions  of  employer  and 
employed.  The  choice  legally  open  to  the  employe  is  not  actually 
open  to  him.  He  cannot  enjoy  his  legal  right  to  be  a  member  of  a 
union,  if  he  is  hampered  thereby  in  working  for  his  living  in  the 
occupation  for  which  he  is  best  fitted. 

To  this  the  majority  reply  that  "constitutional  freedom  of 
contract  does  not  mean  that  a  party  is  to  be  as  free  after  making  a 
contract  as  before."  By  agreeing  to  work,  the  employe  yields  the 
enjoymient  of  his  legal  right  to  use  his  time  as  he  pleases.  "Freedom 
of  contract,  from  the  very  nature  of  the  thing,  can  be  enjoyed  only 
by  being  exercised;  and  each  particular  exercise  of  it  involves  mak- 
ing an  agreem.ent  which,  if  fulfilled,  prevents  for  the  time  any  in- 
consistent course  of  conduct."  While  an  individual  has  a  legal  right 
to  join  a  union  "he  has  no  inherent  right  to  do  this  and  still  remain 
in  the  employ  of  one  who  is  unwilling  to  employ  a  union  man." 

This  of  course  is  but  to  reiterate  the  common-law  situation.  The 
statute  meant  to  give  the  employe  a  freedom  he  did  not  have  at 
common  law.  The  minority  says  that  his  ancient  legal  liberty  was 
not  an  actual  liberty,  and  that  it  is  within  the  power  of  the  state  to 
add  to  his  actual  liberty.  In  so  doing  it  cuts  down  the  legal  liberty 
of  the  employer,  but  it  leaves  him  with  an  actual  liberty  v;hich,  by 
reason  of  his  economic  superiority,  is  equal  to  the  actual  liberty  of 
the  employe. 

This  discussion  of  liberty  is  of  value  only  as  it  leads  us  to  the 
issue  of  equality.  Of  course  no  one  has  actual  liberty  to  use  all  his 
legal  liberty.  He  must  pick  and  choose.  Every  one  is  subject  to 
some  degree  of  economic  coercion.     Mr.  Justice  Day's  statement 


234     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

that  the  Kansas  statute  ''has  for  its  avowed  purpose  the  protection 
of  the  exercise  of  a  legal  right"  to  join  a  union  is  true  enough  as 
far  as  it  goes.  But  it  has  the  same  incompleteness  which  marks 
the  argument  of  the  majority  that  the  statute  interferes  with  the  legal 
right  of  employers  to  prescribe  the  conditions  on  which  they  will 
make  contracts.  The  protection  of  the  common-law  right  of  the  one 
is  gained  only  by  limiting  the  common-law  right  of  the  other.  All 
argument  is  vain  which  confines  itself  to  the  elaboration  of  the 
effect  of  the  statute  on  one  of  these  rights,  disregarding  its  effect 
on  the  other. 

The  common  law  left  the  employe  free  to  join  a  union.  It  left 
the  employer  free  to  decline  to  hire  members  of  a  union.  In  some 
upper  conceptual  chamber  these  two  common-law  hberties  may  dwell 
together  in  amity.  In  actual  life  they  conflict.  The  conflict  had  to 
be  resolved  in  the  course  of  a  struggle  in  wiiich  the  public  interests 
suffered.  If  the  state  is  to  step  in  to  aid  the  public  interest  by 
reducing  the  friction  between  the  parties,  it  must  do  som.ething  more 
than  to  sanction  what  already  exists.  The  minority  is  correct  in  its 
position  that  the  state  has  protected  the  exercise  of  the  legal  liberty 
of  the  employe.  The  majority  is  correct  in  its  assertion  that  the  state 
has  interfered  with  a  previous  legal  liberty  of  employers.  The  issue 
is  whether  the  form.er  is  a  justification  for  the  latter. 

The  majority,  in  seeking  for  possible  justifications,  find  none. 
Other  interferences  with  liberty  which  have  been  judicially  sanctioned 
have  been  "fairly  deemed  necessary  to  secure  some  object  directly 
affecting  the  public  welfare."  But  of  the  statute  in  question,  putting 
aside  the  question  of  coercion,  Mr.  Justice  Pitney  says: 

.  .  .  There  is  no  object  or  purpose,  expressed  or  implied,  that 
is  claimed  to  have  reference  to  health,  safety,  morals,  or  public  wel- 
fare, be3^ond  the  supposed  desirability  of  leveling  inequalities  of 
fortune  by  depriving  one  who  has  property  of  some  part  of  what  is 
characterized  as  his  "financial  independence."  In  short,  an  inter- 
ference with  the  normal  exercise  of  personal  liberty  and  property 
rights  is  the  primary  object  of  the  statute,  and  not  an  incident  to  the 
advancement  of  the  general  welfare. 

This  is  to  say  that  the  object  of  the  statute  is  to  promote  equality 
of  actual  opportunity,  solely  for  the  sake  of  that  equality — a  result 
w^hich  could  not  promote  the  general  welfare.  Moreover  the  Consti- 
tution is  regarded  as  having  been  designed  to  prevent  the  legislature 
from  promoting  equality  of  opportunity.  Inequality  is  the  necessary 
result  of  the  institution  of  private  property.  "Wherever  the  right  of 
private  property  exists,  there  m/ast  and  will  be  inequalities  of  for- 
tune." It  is  "impossible  to  uphold  freedom  of  contract  and  the  right 
of  private  property  without  at  the  same  time  recognizing  as  legitimate 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      235 

those  inequalities  of  fortune  that  are  the  necessary  result  of  the  ex- 
ercise of  those  rights."  Since  a  state  may  not  cut  down  the  rights  of 
private  property  directly,  it  "may  not  do  so  indirectly,  as  by  declar- 
ing in  effect  that  the  public  good  requires  the  removal  of  those 
inequalities  that  are  but  the  normal  and  inevitable  result  of  their 
exercise,  and  then  invoking  the  police  power  in  order  to  remove  the 
inequalities,  without  other  object  in  view." 

Constitutional  freedom  of  contract  therefore  is  not  ''freedom  of 
action."  It  is  freedom  from  legislative  interference  with  action. 
This  is  freedom  for  employer  and  employe  alike,  even  though  for 
the  employe  it  is  but  the  wraith  of  genuine  freedom.  Equality  be- 
tween employer  and  employe  is  not  approximate  evenness  of  bar- 
gaining position.  It  exists  only  when  both  are  equally  let  alone  by 
the  legislature.  The  state  may  not,  as  Mr.  Justice  Holmes  contends, 
"establish  the  equality  of  position  in  which  liberty  of  contract  be- 
gins." It  m.ust  not  interfere  with  that  inequality  of  position  which 
enables  the  one  with  superior  position  to  drive  a  hard  bargain.  The 
owner  of  property  must  be  guaranteed  advantage  in  all  his  dealings 
with  those  v,ho  have  less  than  he.  In  the  words  of  Mr.  Justice 
Pitney : 

Indeed,  a  little  reflection  will  show  that  wherever  the  right  of 
private  property  and  the  right  of  free  contract  co-exist,  each  party 
when  contracting  is  inevitably  more  or  less  influenced  by  the  ques- 
tion whether  he  has  much  property,  or  little  or  none;  for  the  contract 
is  made  to  the  very  end  that  each  may  gain  something  he  needs  or 
desires  more  urgently  than  that  which  he  proposes  to  give  in  ex- 
change  If  the  opinions  in  the  Coppage  case  do  not  deal 

satisfactorily  with  the  determining  issue,  they  are  not  alone  in  their 
deficiencies.  Like  many  other  judicial  opinions  they  use  methods 
unsuited  to  the  task  in  hand.  But  though  they  give  us  little  or  no 
guidance  in  forming  an  intelligent  judgment  on  the  merits  of  the 
legislation  under  review,  they  afford  interesting  evidence  of  the  meth- 
ods by  Vvhich  constitutional  limitations  are  actually  interpreted  and 
app  .cd. 

The  Kansas  statute  deprived  employers  of  a  liberty  which  they 
were  allowed  by  common  law.  But  the  Constitution  does  not  un- 
qualifiedly forbid  the  taking  of  liberty.  It  forbids  it  only  when  the 
taking  is  without  due  process  of  law.  And  the  meaning  of  due 
process  is  not  hinted  at.  It  has  been  left  for  the  courts  to  work  out. 
In  so  far  as  the  clause  has  become  a  criterion  of  the  validity  of 
legislative  objects,  the  issue  is  always  what  constitutes  an  adequate 
justification  for  the  taking  in  question.  It  is  not  logic  nor  the 
language  of  the  Constitution  which  declares  that  the  promotion  of 
the  liberty  of  the  laborer  to  be  a  member  of  a  union  is  not  a 


236     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

legitimate  legislative  object.  It  is  a  judgment,  conscious  or  uncon- 
scious, on  a  question  of  policy.  The  issue  in  the  Coppage  case  was 
one  of  policy  and  all  the  competing  interpretations  of  the  terms 
"liberty"  and  "equality"  cannot  disguise  the  fact. 

....  The  inadequacy  of  the  reasoning  in  many  constitutional 
opinions,  to  which  Mr,  Justice  Holmes  refers,  drives  those  who  seek 
to  understand  the  actual  working  of  our  institutions  of  government 
to  look  beyond  that  reasoning.  The  explanation  of  the  decisions 
not  infrequently  depends  in  part  upon  the  social  philosophy  of  the 
judges,  and  in  part  upon  their  psychology.  Some  judges  succeed 
fairly  easily  in  disregarding  their  personal  views  of  policy  and  in  sus- 
taining statutes  for  which  as  legislators  they  would  not  have  voted. 
Others  find  the  task  more  difficult,  possibly  because  their  predilec- 
tions are  stronger,  possibly  because  they  are  less  conscious  of  the  con- 
siderations that  press  to  play  a  part  in  their  decisions.  Difficult  as  it 
is  to  tell  just  what  weight  these  factors  have  in  the  development  of 
our  constitutional  law,  it  is  impossible  to  exclude  them  entirely.  We 
know  pretty  clearly  the  contrast  between  Marshall  and  Taney.  On 
some  important  questions  it  is  not  difficult  to  prophesy  accurately 
in  advance  how  the  last  three  judges  appointed  to  the  bench  will 
align  themselves.  With  others  the  task  is  more  difficult.  But  the 
fact  that  considerations  which  may  influence  decisions  elude  dis- 
covery does  not  negative  their  presence  or  their  power.  Whenever 
judicial  decisions  must  be  adjudged  logically  bankrupt,  and  the  bank- 
ruptcy is  recognized  by  dissenting  colleagues,  we  may  feel  insecure 
in  dismissing  as  unimportant  the  relation  between  the  social  outlook 
of  legislators  and  the  social  outlook  of  judges. 

Ill 

The  majority  opinions  in  the  Adair  case  and  the  Coppage  case 
set  forth  clear  and  definite  ideas  o"f  liberty  and  equality.  It  is  of 
the  essence  of  the  liberty  of  employers  that  they  be  free  to  accept  or 
reject  employes  for  any  reason  they  please.  It  is  of  the  essence  of 
the  liberty  of  employes  that  they  be  free  to  join  unions  or  to  keep 
aloof  from  them.  Equal  freedom  for  employers  and  for  employes 
is  the  watchword  of  the  opinions.  This  freedom,  however,  is  not  free- 
dom from  economic  pressure.  It  is  freedom  from  legal  restraint. 
Unions  are  lawful  organizations,  like  churches,  political  parties, 
and  the  national  guard.  But  they  are  not  entitled  to  the  aid  of 
the  law  in  their  efforts  to  increase  their  numbers.  They  must  make 
their  own  way.  But  this  they  must  be  free  to  do,  so  far  as  the  law 
is  concerned,  unless  they  adopt  obnoxious  methods.  Leaving  aside 
the  question  of  methods,  equality  of  legal  right  between  employers 
and  employed  means  the  non-interference  of  the  law  in  their  strug- 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      237 

gles  over  collective  bargaining.  And  this  principle  of  equality  of 
non-interference  is  so  sacred  that  legislation  cannot  trespass  upon 
it  without  running  afoul  of  the  restrictions  set  by  due  process. 

From  these  views  of  policy  which  permeate  the  majority  opinions 
in  the  two  cases  thus  far  considered,  we  turn  to  the  case  of  Hitchman 
Coal  and  Coke  Company  v.  Mitchell.  The  complainant  was  a  closed 
non-union  mine.  Each  employe  was  engaged  under  circumstances 
which  the  majority  opinion  states  as  follows: 

Mr.  Pickett,  the  mine  superintendent,  had  charge  of  employing 
the  men,  then  and  afterwards,  and  to  each  one  who  applied  for  em- 
ployment he  explained  the  conditions,  which  were  that  while  the  com- 
pany paid  the  wages  demanded  by  the  union  and  as  much  as  any- 
body else,  the  mine  was  run  non-union  and  would  continue  so  to 
run ;  that  the  company  would  not  recognize  the  United  Mine  Workers 
of  America;  that  if  any  man  wanted  to  become  a  member  of  that 
union  he  was  at  liberty  to  do  so;  but  he  could  not  be  a  member  of 
it  and  remain  in  the  employ  of  the  Hitchman  Company;  that  if  he 
worked  for  the  company  he  would  have  to  work  as  a  non-union  man. 
To  this  each  man  employed  gave  his  assent,  understanding  that  while 
he  worked  for  the  company  he  must  keep  out  of  the  union.  While 
this  arrangement  was  in  force,  officers  of  the  United  Mine  Workers 
of  America  visited  the  employes  and  solicited  them  to  agree  to  join 
the  union  and  to  keep  secret  the  fact  of  their  so  agreeing,  until  such 
time  that  enough  had  agreed  so  that  the  officers  of  the  union  were 
ready  to  have  the  employer  informed.  Against  these  acts  of  solicita- 
tion, an  injunction  was  granted  by  the  district  court.  After  being 
reversed  by  the  court  of  appeals  the  decree  of  the  district  court  was 
sustained  by  the  Supreme  Court,  with  the  exception  of  that  part 
which  restrained  picketing  and  acts  of  violence.  The  exception  was 
due  to  the  fact  that  neither  of  these  forms  of  interference  had  been 
attempted.  .  .  . 

....  Earlier  in  the  opinion  Mr.  Justice  Pitney  refers  to  the 
''rights  of  workingmen  to  form  unions,  and  to  enlarge  their  mem- 
bership by  inviting  other  workingmen  to  join  them"  and  says:  "the 
right  is  freely  conceded,  provided  the  objects  of  the  union  be  proper 
and  legitimate,  which  we  assume  to  be  true,  in  a  general  sense,  with 
respect  to  the  union  here  in  question."  But  then  he  adds:  "The 
cardinal  error  of  defendant's  position  lies  in  the  assumption  that  the 
right  is  so  absolute  that  it  may  be  exercised  under  any  circum- 
stances and  without  any  qualification;  whereas,  in  truth,  like  other 
rights  that  exist  in  civilized  society,  it  must  always  be  exercised  with 
reasonable  regard  for  the  conflicting  rights  of  others." 

The  minority  concede  that  the  defendant  must  show  justification. 
"They  were  within  their  rights,"  says  Mr,  Justice  Brandeis,  "if,  and 


238      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

only  if,  their  interference  with  the  relation  of  plaintiff  to  its  em- 
ployes was  for  justifiable  cause."  And  the  justification  is  then  stated 
as  follows: 

'•The  purpose  of  interfering  was  confessedly  in  order  to  strength- 
en the  union,  in  the  belief  that  thereby  the  conditions  of  workmen 
engaged  in  mining  would  be  improved;  the  bargaining  power  of  the 
individual  workingman  was  to  be  strengthened  by  collective  bar- 
gaining; and  collective  bargaining  was  to  be  insured  by  obtaining  the 
union  agreement.  It  should  not,  at  this  day,  be  doubted  that  to  in- 
duce workingmen  to  leave  or  not  to  enter  an  employment  in  order 
to  advance  such  a  purpose,  is  justifiable  when  the  workmen  are  not 
bound  by  contract  to  remain  in  such  employment." 

But  the  majority  insist  that  the  end  aimed  at  was  not  a  justifica- 
tion for  the  interference.  "The  defendant's  activities,"  says  Mr. 
Justice  Pitney,  "cannot  be  treated  as  a  bona  fide  effort  to  enlarge  the 
membership  of  the  union."  The  reason  given  is  in  substance  that 
it  was  an  effort  to  do  something  more  than  to  enlarge  the  union. 
It  was  an  attempt  to  unionize  the  mine  after  the  union  was  enlarged. 
But  Mr.  Justice  Pitney  says  that  "there  is  no  evidence  to  show  nor 
can  it  be  inferred,  that  defendants  intended  or  desired  to  have  the 
men  at  the  mines  join  the  union,  unless  they  could  organize  the 
mines."  Of  course,  if  they  gained  this  end  they  would  enlarge  the 
union.  And  the  enlargement  of  the  union  is  always  sought  for  some 
more  concrete  advantage  than  mere  growth  in  numbers.  The  reason 
why  there  is  any  truth  to  the  statement  that  the  defendants  did  not 
wish  plaintiff's  employes  to  join  the  union  unless  the  mine  could  be 
thereby  unionized  is  that  such  unionization  was  deemed  necessary  in 
order  to  safeguard  the  interests  of  the  men  after  they  were  in  the 
union  and  to  make  it  possible  for  them  to  remain  in  the  union. 

But  Mr.  Justice  Pitney's  analysis  of  the  defendants'  purposes, 
however  faulty,  indicates  where  he  draws  the  line  as  to  what  con- 
stitutes an  adequate  justification.  Union  organizers  can  get  men 
to  join  the  union,  if  they  do  not  thereby  interfere  with  the  em- 
ployer's "undoubted  legal  and  constitutional  right  to  run  its  mine 
'non-union.'  "  They  may  increase  the  union  if  they  do  it  in  such 
a  way  that  an  employer  can  readily  continue  to  get  non-union  la- 
borers. But  they  must  not  attempt  to  "alienate  a  sufficient  number 
of  men  to  shut  down  the  mine,  to  the  end  that  the  fear  of  losses 
through  stoppage  of  operations  might  coerce  plaintiff  into  'recogniz- 
ing the  union'  at  the  cost  of  its  own  independence."  The  purpose  of 
organizing  the  mine  is  no  justification.  Where  "unionizing  the 
miners  is  but  a  step  in  the  process  of  unionizing  the  mine,"  the  plain- 
tiff "is  as  much  entitled  to  prevent  the  first  step  as  the  second,  so 
far  as  his  own  employes  are  concerned,  and  to  be  protected  against 


POWER  AND  POLICY  OF  ORGANIZED  LABOR      239 

irreparable  injury  resulting  from  either."  And  the  purpose  of  se- 
curing collective  bargaining  is  not  a  justification  for  disturbing  an 
employer  unless  the  employer  is  willing  to  bargain  that  way. 
"Whatever  may  be  the  advantages  of  'collective  bargaining,'  it  is 
not  bargaining  at  all,  in  any  just  sense,  unless  it  is  voluntary  on 
both  sides." 

If  law,  as  Mr.  Justice  Holmes  says,  is  a  prophecy  of 

what  courts  will  do  in  fact,  it  is  more  important  to  know  what  a 
majority  of  the  Supreme  Court  think,  than  what  they  have  tech- 
nically decided.  And  it  seems  pretty  clear  that  at  present  a  majority 
of  the  Supreme  Court  think  that  labor  unions  must  take  no  steps 
whatever  to  unionize  a  non-union  mine,  at  least  where  its  non-union, 
character  has  been  protected  by  contracts  with  the  employes.  In  the 
absence  of  such  an  object,  they  may  take  steps  to  get  union  members 
from  a  non-union  mine,  provided  the  employer  is  apprised  of  each 
inch  of  their  progress.  If  their  success  is  sufficiently  rapid,  the  em- 
ployer may  find  himself  in  a  position  where  he  prefers  to  ask  the  men 
to  come  back  even  though  they  remain  in  the  union.  There  arises 
a  new  situation  which  the  Hitchman  case  does  not  cover.  For  it  is 
explicitly  stated  in  the  majority  opinion  that  "the  case  involves 
no  question  of  the  rights  of  employes,"  and  further  that  the  "de- 
fendants could  not,  without  agency,  set  up  any  rights  that  employes 
might  have." 

These  competing  policies  are  undoubtedly  debatable. 

It  is  much  less  clear  that  the  judges  have  satisfactorily  debated 
them.  Much,  if  not  most,  of  the  reasoning  given  in  support  of 
the  decisions  is  abstract  and  artificial.  "Liberty  and  equality  and 
right"  seem  often  to  be  terms  to  conjure  with,  rather  than  to  en- 
lighten. We  are  not  likely  to  get  a  solution  of  the  problem  of 
collective  bargaining,  through  the  jurisprudence  of  abstract  concep- 
tions. Indeed  jurisprudence  of  any  kind  may  play  but  a  pigmy  part 
in  the  solution  which  seems  to  be  conditioned  less  on  the  conclusion 
of  judicial  reasoning  than  on  what  a  despised  and  revered  writer  has 
called  "that  singular  line  of  expedience  which  the  drift  of  circum- 
stance, being  not  possessed  of  a  legal  mind,  has  employed  in  the 
sequence  of  institutional  change  hitherto."  The  three  decisions 
under  review  do  not  seem  greatly  to  have  delayed  the  progress  of 
collective  bargaining.  They  may  soon  be  mainly  of  philosophical  and 
antiquarian  interest. 


VII.    PROPOSED  PLANS  OF  ACTION 


1.    REFORM 

Graham  Wallas:  The  Great  Society*  (pp.  348-69) 

But  the  position  of  men  and  women  in  the  great  industry  is  only 
one  of  a  multitude  of  problems  in  the  Great  Society  whose  solution 
is  best  approached  by  the  criterion  of  Happiness.  In  applying  that 
criterion  it  is  often  convenient  to  use  Aristotle's  quantitative  con- 
ception of  the  Mean.  Although  particular  pleasure-sensations  are 
caused  by  the  stimulation,  whether  weak  or  strong,  of  particular 
dispositions,  the  feeling  tone  of  pleasantness,  and  still  more  the  state 
of  consciousness  called  Happiness,  may  accompany  the  stimulation 
of  all  or  any  of  our  dispositions,  provided  that  that  stimulation  takes 
place  neither  in  excess  nor  defect  but  to  the  right  or  "Mean"  degree. 
If  we  use  this  formula,  it  becomes  easy  to  see,  for  instance,  that, 
outside  as  well  as  inside  the  hours  of  industrial  employment,  failures 
in  the  organized  production  of  Happiness  are  often  due  to  the  fact 
that  "Division  of  Labor"  has  been  carried  to  a  point  where,  in  respect 
of  some  particular  function,  the  mass  of  mankind  have  too  little  given 
them  to  do  for  Happiness,  and  a  few  responsible  persons  too  much. 
The  old  objection  to  the  "dull  uniformity"  of  Socialism,  which  has 
always  seemed  so  absurd  to  the  Socialists,  and  which  nevertheless 
so  constantly  reappears,  is  due  to  a  half-conscious  realization  in  the 
average  man's  mind  from  innumerable  cases  where,  under  public  or 
philanthropic  management,  the  function  of  Thought  has  been  loaded 
onto  a  single  overworked  brain  and  denied  to  the  many  who  in  that 
respect  are  underworked.  One  sees  the  girls  from  an  orphanage  file 
along  the  street.  Each  girl  walks  by  a  companion,  not  chosen  by 
herself  with  all  the  painful-delightful  scheming  of  girlhood,  but  by 
the  tired  mistress  who  gives  a  general  order  that  the  girls  nearest  to 
each  other  in  height  should  walk  together.  They  all  wear  clothes 
and  boots  and  carry  umbrellas  of  the  same  pattern.  A  uniform  hat- 
ribbon  may  be  necessary  for  recognition  and  discipline;  but  one 
feels  that  if  each  girl  had  chosen  her  necktie  and  umbrella,  even 
from  a  dozen  equally  cheap  patterns,  both  the  choosing  and  the  wear- 
ing would  have  been  a  source  of  positive  Happiness.  If  a  committee 
of  each  class  in  such  an  institution  chose  dinner  daily  from  the  list 

*  Copyright,  The  Macmillan  Company.     Reprinted  by  permission. 

24^ 


244      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  possible  dishes,  six  girls  would  spend  ten  minutes  each  in  the  effort 
of  Thought  instead  of  one  matron  spending  ten  seconds.  But  the 
girls  would  enjoy  their  effort  and  the  matron  does  not. 

The  fact,  again,  that  there  is  a  Mean  in  our  powers  of  forming 
intim.ate  acquaintance,  that  it  is  a  joy  to  know  enough  people  and  a 
weariness  to  know  too  many,  affects  not  only  the  group-organization 
of  the  Great  Industry,  but  also  the  life  of  the  industrial  worker  dur- 
ing the  now  slowly  lengthening  interval  between  his  work  and  his 
sleep.  The  young  unmarried  artisan,  or  shopman,  or  clerk  generally 
lives  either  in  a  one-roomed  lodging  with  a  defect  of  intimate  asso- 
ciation or  in  a  great  boarding-house  with  an  excess  of  it.  Outside  his 
factory  or  office,  he  may  either  know  no  one  to  speak  to  or  have  a 
hundred  nodding  acquaintances  and  no  friend. 

Many  opponents  to  the  socialistic  tendency  in  modern  politics  are 
honestly  convinced  that  this  departure  from  the  Mean  in  the  use  of 
human  faculties  is  a  necessary  result,  both  of  the  collectivist  type  of 
organization,  and  of  dependence  upon  exceptional  public  spirit  as  a 
directing  social  force.  The  representative  or  the  philanthropist  is, 
they  believe,  compelled  by  the  nature  of  his  being  to  do  his  fellow- 
men's  thinking  for  them,  and  to  think  of  them  as  if  they  were  all 
alike.  It  is  only  when  you  leave  mankind  as  far  as  possible  "free" 
to  direct  their  own  lives,  that  they  will,  it  is  argued,  each  for  himself, 
contrive  a  working  approximation  to  the  Mean.  At  this  point  the 
anarchist-communist  and  the  individualist  defender  of  property  are 
often  in  very  real  sympathy.  Hodgskin  and  Proudhon  were  perhaps 
the  two  ablest  leaders  in  the  nineteenth-century  revolt  against  prop- 
erty as  the  enemy  of  freedom.  But  both  of  them  ended  in  believing 
that  their  ideal  would  be  best  attained  by  the  defense  of  property 
against  the  States.  In  England  to-day,  Mr.  Belloc  and  Mr.  Chester- 
ton, while  attempting  to  recreate  the  ideal  of  Catholic  peasant  pro- 
prietorship in  a  world  of  railways  and  factories,  often  find  them- 
selves in  alliance  with  those  interests  which  have  no  ideals  beyond 
the  rapid  making  of  large  fortunes. 

The  present  form  of  the  doctrine  that  Happiness  is  better  at- 
tained by  Laissez-Faire  (secured  either  by  the  existing  rights  of 
property  or  by  some  kind  of  anarchism,  or  by  such  a  combination  of 
the  two  as  the  "Associative"  or  "Distributive"  State)  than  by  either 
the  Representative  State  or  organized  philanthropy,  may  perhaps  be 
put  most  effectively  if  it  is  divided  into  two  arguments.  The  first 
would  be  that  which  I  have  just  indicated,  that  new  social  arrange- 
ments to  meet  the  needs  of  a  new  environment  cannot  be  invented 
for  the  mass  of  mankind  by  a  few  professed  thinkers  and  politicians, 
but  must  be  the  result  of  innumerable  experiments  in  which  as  many 
individuals  as  possible  have  freely  taken  part.    The  second  argu- 


PROPOSED  PLANS  OF  ACTION  245 

ment  would  be  that  no  new  arrangements  which  are  invented  can 
work  well  unless  they  are  based  upon  the  permanent  freedom  of 
each  individual  to  manage  his  own  life  and  to  use  or  abuse  his  own 
property. 

With  regard  to  the  first,  it  is  true  that  Happiness  depends  upon 
so  subtle  and  complex  a  harmony  of  innumerable  factors  that  the 
mind  of  the  single  thinker  is  a  poor  substitute  for  the  intimate 
experiences  of  the  many  minds  for  whom  he  thinks.  But  yet  the 
very  complexity  and  interconnection  of  all  modern  social  problems 
make  it  almost  impossible  for  social  invention  to  proceed  by  indi- 
vidual experiments,  founded  upon  the  individual  needs  of  the  in- 
ventor and  his  family,  and  imitated  by  their  neighbors.  If  any 
large  proportion  of  the  young  clerks  and  apprentices  in  a  great  mod- 
ern city  are  to  form  the  right  kind  of  friendships,  it  is  not  enough, 
though  it  is  important,  that  boys  or  parents  should  look  out  for 
chances.  Some  one  possessed  of  special  power  or  knowledge  or  de- 
votion must  also  cause  "overtime"  to  be  so  regulated  and  restricted 
that  the  lads  can  make  and  keep  appointments  with  each  other  after 
work.  And  now  that  the  streets  are  nearly  as  noisy  and  as  full  of 
moving  machinery  as  a  factory,  some  one  must  arrange  the  provision 
of  quiet  places  (class  rooms  out  of  school  hours,  clubs,  gymnasiums, 
or  parks),  where  lads  can  talk  and  play  together;  or  tram  commit- 
tees or  railway  companies  must  grant  new  facilities  for  carrying  them 
to  the  spots  from  which  country  walks  can  begin.  We  now  take 
the  continuous  discovery  and  immediate  spread  of  mechanical  in- 
ventions for  granted,  because  we  grant  patents  for  them,  and  a  pat- 
entee can  make  a  fortune  by  pushing  his  ideas.  But  no  patents  are 
granted,  because  no  monopoly  is  possible,  for  inventions  in  social 
organization.  Though  it  may  occasionally  pay  a  railway  company 
to  advertise  the  general  notion,  say,  of  country  walking,  the  inventors 
of  the  Boy  Scouts  had  to  spend  unrewarded  years  in  laloorious  propa- 
ganda, and  in  the  still  more  laborious  collection  of  subscriptions, 
before  their  ideas  could  be  made  effective. 

While,  therefore,  it  is  true  that  social  (as  distinguished  from 
mechanical)  inventions  are  not  likely  to  be  made  at  all  in  the  Great 
Society  unless  the  feelings  and  experience  of  many  individuals  are 
brought  to  bear  upon  them,  it  is  not  true  that  such  social  inventions 
will  often  be  effectively  made  unless  that  experience  is  interpreted 
by  organized  effort,  inspired  by  "non-economic"  motives.  And  these 
motives  are  not  now  likely  to  be  sufficiently  strong  and  lasting  unless 
they  are  made  either  by  individuals  of  exceptional  public  spirit  or 
by  a  government  whose  direct  purpose,  however  imperfectly  carried 
out,  is  the  general  good.  It  is  this  fact  which  renders  every  in- 
crease in  the  articulateness  of  working  men  and  women,  in  the 


246     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

power,  that  is  to  say,  to  bring  their  feelings  and  experience  and  ideas 
into  the  common  stock  so  important.  .  ,  . 

The  problem  of  inventing  new  social  customs  in  working-class 
homes  involves,  indeed,  like  the  problem  of  inventing  social  oppor- 
tunities for  the  young  independent  worker,  a  much  more  complex 
and  difficult  series  of  factors  than  does  the  corresponding  problem 
under  middle-class  conditions.  A  well-to-do  family  can  live  where 
they  like,  and  in  a  house,  within  wide  limits,  of  any  shape  or  size 
that  they  choose.  The  workingman  has  to  live  near  his  work  in  a 
house  built  by  a  great  company,  according  to  plans  narrowly  con- 
trolled by  local  by-laws.  An  annual  fortnight's  holiday  for  any 
large  numiber  of  families  may  require  an  elaborate  agreement  be- 
tween the  local  education  authority  who  teach  the  children  and  the 
manufacturing  firms  who  employ  the  parents.  The  question  whether 
it  ought  to  be  the  custom  for  daughters  to  go  for  evening  walks  de- 
pends upon  the  opening  and  shutting  and  lighting  and  policing  of 
the  nearest  public  park. 

If,  therefore,  a  branch  of  the  Workers'  Educational  Association, 
or  of  the  Cooperative  Union,  consisting  about  equally  of  men  and 
women  of  the  working  class,  would  work  on  this  problem  with  a 
trained  woman  sociologist  who  had  access  to  the  customs  of  other 
countries,  a  philanthropic  employer,  and  a  member  of  the  local 
municipal  council,  the  best  conditions  of  invention  might  be  at- 
tained; and  they  might  even  find  themselves  making  an  important 
beginning  in  the  invention  of  social  customs  for  that  possible  Eng- 
lish society  of  the  future  where,  as  now  in  New  Zealand  or  parts  of 
Switzerland,  almost  the  whole  population  would  belong  to  one 
"class." 

Such  an  inquiry  would  enable  those  who  took  part  in  it  not  only 
to  think  with  effect  upon  the  customs  of  the  average  home,  but  to 
remember  that  which  it  is  so  easy  to  forget,  the  quantitative  rela- 
tion between  a  city  and  its  inhabitants. 

Convenient  city  quarters  cannot  be  created  by  each  family 
choosing  a  site  for  itself,  any  more  than  healthy  city  houses  can  be 
built  without  by-laws.  The  width  and  direction  of  streets,  the  size 
and  position  of  the  public  buildings  and  parks,  as  well  as  the  height 
and  material  of  the  buildings,  must  be  finally  fixed  by  some  one 
acting  on  behalf  of  the  whole  community.  The  science  of  city- 
planning  is  therefore  rapidly  developing  into  the  master-science  of 
the  material  conditions  of  modern  life.  But  when  one  looks,  for 
instance,  at  the  beautiful  drawings  which  have  been  lately  prepared 
by  a  body  of  citizens  for  a  new  Chicago,  one  feels  that  they  are 
suited  to  giants  and  not  men,  or  at  least  only  to  the  gigantic  quah- 
ties  of  mankind.     It  is  a  good  thing  that  every  citizen's  heart  should 


PROPOSED  PLANS  OF  ACTION  247 

be  occasionally  stirred  by  seeing  the  tower  of  a  tall  municipal  office 
against  the  skyline,  or  by  standing  beneath  the  enormous  dome  of  a 
museum.  But  ten  parks,  which  the  inhabitants  of  ten  quarters  can 
reach  in  a  twenty-minutes'  walk,  are  better  than  one  park  ten  times 
as  large  which  few  can  reach  without  losing  a  day's  work;  and  if  a 
working  man's  wife  is  to  buy  the  family  supplies  in  comfort,  shop- 
ping streets  must  be  neither  too  far  distant  for  her  feet  nor  too  broad 
for  her  eyes. 

The  second  problem,  however,  in  the  relation  between  freedom 
and  social  invention  is  the  more  important.  Ought  all  social  in- 
quiries to  be  based  on  the  assumption  that  Freedom  is  the  abso- 
lutely essential  condition  of  human  Happiness,  and,  if  so,  what  does 
Freedom  exactly  mean?  In  considering  this  second  problem,  it  will 
be  convenient  to  project  Freedom  onto  the  same  plane  as  Happi- 
ness, to  think  of  Freedom,  that  is  to  say,  not  as  an  external  social 
arrangement,  but  as  the  state  of  consciousness  which  is  expected  to 
result  from  certain  arrangements,  and  which  can  be  studied  in  rela- 
tion to  the  state  of  consciousness  called  Happiness.  Common  speech 
has  always  insisted  on  the  close  connection  between  Freedom,  in 
this  sense,  and  Happiness  or  Pleasantness.  A  man  feels  "free" 
when  he  acts  at  his  "pleasure."  And  those  who  agree  with  Tolstoy 
and  Ibsen  and  Mr.  Shaw  that  Freedom  is  a  necessary  condition,  not 
only  of  Happiness  but  of  Goodness,  sometimes  express  that  opinion 
in  terms  of  "pleasure."  When  I  was  in  America  in  19 10,  a  quarrel 
took  place  between  Mr.  Conners  of  the  New  York  State  Democratic 
organization  and  Mr.  Charles  Murphy  of  Tamm.any  Hall.  Mr. 
Conners  issued  a  short  apologia  pro  vita  sua  in  the  form  of  a  news- 
paper interview.  In  the  course  of  it  he  gave  as  the  main  justifica- 
tion for  his  claim  to  be  a  better  citizen  than  Mr.  Murphy:  "I  am 
just  a  natural  man.  .  .  .  Murphy  is  a  politician  for  profit,  and  I 
am  a  politician  for  pleasure;  and  I  propose  to  have  my  fun  out 
of  it." 

A  man  feels  "free"  when  his  acts  and  sayings  and  thoughts  seem 
to  him  to  be  the  expression  of  his  most  real  and  spontaneous  mo- 
tives. It  is  true  that  some  men  will  never  in  that  sense  be  "free," 
never  enjoy  what  Mr.  Conners  calls  their  "pleasure,"  even  though 
they  are  as  completely  released  from  external  compulsion  as  a  mod- 
ern dividend  receiver  with  three  thousand  a  year  and  a  motor  car. 
They  may  remain  the  slaves  of  convention;  their  minds  may  be  the 
"disused  rabbit-warrens  of  other  peoples'  opinions  and  prejudices." 
Or  they  may  be  (as  Mr.  Conners  accused  Mr.  Murphy  of  being) 
the  slaves  of  money,  unable  to  distinguish  the  getting  of  money  for 
its  own  sake  from  the  free  activity  to  which  money  is  only  a  means. 
Or  they  may  be  the  slaves  of  animal  passions  which  they  feel  not 


248     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

to  be  thdr  real  selves.  Other  men,  as  the  later  Stoics  were  never 
tired  of  pointing  out,  may  feel  as  "free"  as  Epictetus,  even  though 
they  are  in  a  state  of  economic  slavery  almost  as  complete  as  that  of 
Epictetus.  Marcus  Aurelius  would  say  that  such  men  "follow  na- 
ture," and  Mr.  Conners  that  they  are  "natural  men." 

But  even  if  such  Freedom  is  possible  in  every  form  of  society, 
the  actual  organization  of  a  society  where  Freedom  is  held  to  be 
all-important  will  be  different  from  that  of  a  society  in  which  Free- 
dom is  held  to  be  only  one  element  among  the  conditions  of  Happi- 
ness. .  .  . 

In  applying  Aristotle's  formula  of  the  Mean,  we  must,  however, 
remember  that  Aristotle  himself  inevitably  over-simplified  it.  He 
proposed  with  regard  to  each  human  disposition  in  each  relation  of 
life  a  single  type  of  "mean"  conduct  which  all  men  should  aim  at. 
He  further  taught  that  the  single  environment  in  which  men  could 
reach  the  Mean  was  that  of  the  Greek  city-state.  To  us,  however, 
in  our  complex  and  changing  world,  there  are,  in  the  use  of  each  of 
our  dispositions,  innumerable  different  Means  adapted  to  different 
individuals  and  different  circumstances.  The  differences  between 
individuals  may  be  due  either  to  inheritance  or  training;  either,  as 
the  Eugenists  say,  to  "nature"  or  to  "nurture."  To  every  man  as  he 
is  born  the  personal  conditions  of  a  happy  life  are  different,  and  they 
are  changed  by  everything  that  happens  to  him  from  without.  What- 
ever his  upbringing  may  be,  the  man  of  poetic  genius  will  be  un- 
happy as  a  manual  laborer;  and,  whatever  his  natural  tastes  may 
have  been,  the  trained  student  (however  unhappy  he  may  be  as  a 
student)  will  be  also  unhappy  for  years,  if  not  for  life,  if  he  is  made 
a  manual  laborer.  If,  indeed,  a  man's  "nurture"  has  not  corre- 
sponded to  his  "nature,"  the  possibility  of  anything  like  complete 
Happiness  may  have  been  destroyed  for  him  before  he  is  thirty. 

Already,  therefore,  throughout  the  Great  Society,  the  organiza- 
tion of  public  education  is  being  steadily,  though  slowly  and  insuffi- 
ciently, turned,  with  the  help  of  such  psychological  knowledge  as  is 
now  available,  to  discover  in  tim^e  the  special  faculties  of  children, 
and  to  start  them  on  that  course  of  life  for  which  they  are  best 
fitted.  All  social  reformers  are  also  aiming  at  such  a  manipulation 
of  the  taxation  of  accumulated  wealth  (through  death-duties  and 
the  like),  that  no  man  shall  be  made  extremely  unhappy  either  by  a 
sudden  alteration  of  lifelong  habit  or  by  such  initial  poverty  as  shall 
prevent  him  from  developing  his  powers.  And  meanwhile  we  are  a 
little  ashamed  of  the  insistence,  for  instance,  of  the  average  seden- 
tary journalist,  that  what  is  the  Mean  for  him  must  be  the  Mean  for 
every  one  else,  and  that  a  working  man  who  finishes  on  Saturday  at 
I  p.  m.  a  fifty  hours'  week  of  hard  manual  toil  ought  to  play  foot- 


1 


PROPOSED  PLANS  OF  ACTION  249 

ball,  instead  of  looking  on  at  it,  from  3  p.  m.  to  4:30  p.  m 

If  we  more  often  used  Happiness  instead  of  efficiency  as  our 
social  criterion,  it  might  be  easier  than  it  is  now  for  specialized 
business  men  to  realize,  in  this  respect,  the  limitation  of  their  ordi- 
nary fellow  citizens.  The  English  National  Health  Assurance  Act 
of  iQii  and  the  regulations  founded  upon  it  have  resulted  in  the 
issue  to  the  general  public  of  a  series  of  printed  papers  which  a 
trained  official  working  at  full  speed  would  master  in  a  quarter  of  an 
hour,  and  the  creation  of  a  number  of  recurring  duties  to  which  he 
would  give  two  or  three  minutes  a  week.  But  the  mass  of  helpless 
irritation  and  suffering  which  these  requirements  have  created  in 
the  untrained  public  is  so  large  as  to  make  it  possible  that  the  whole 
course  of  English  political  development  may  be  diverted  by  it  for  a 
generation. 

The  National  Insurance  Act  is  only  one  instance  of  a  danger 
which  continually  attends  the  present  socialistic  trend  of  the  Great 
Society,  and  of  which  those  who  believe  that  that  trend  is  both  nec- 
essary and  good  must  take  careful  heed.  As  long  as  the  Great  So- 
ciety continues,  even  under  the  most  carefully  reformed  conditions, 
and,  still  more,  as  long  as  we  are  engaged  in  the  process  of  its 
reformation,  we  must  submit  to  the  Division  of  Labor;  and  the 
Division  of  Labor  will  involve,  if  it  is  to  be  effective,  a  certain  de- 
gree of  compulsion.  That  compulsion  may  be  direct,  as  when  we 
compel  all  parents  to  send  their  children  to  school,  or  all  landlords 
to  keep  their  houses  in  a  sanitary  condition,  or  all  youths  to  serve 
in  the  army;  or  indirect,  as  when  the  Poor  Law  Guardians  offer  work 
to  unemployed  persons,  or  secondary  schools  offer  education  to  quali- 
fied children,  under  stated  conditions,  or  when  an  election  or  refer- 
endum is  based  on  the  assumption  that  every  citizen  will  think  and 
vote.  In  either  case  the  man  who  draws  up  the  necessary  regula- 
tions is  a  trained  and  specialized  enthusiast,  a  keen  "educationist," 
or  doctor,  or  military  officer,  or  politician.  They  all  believe  that 
the  efforts  which  they  require,  and  which  are  so  easy  to  themselves, 
will  make  those  from  whom  they  require  them  both  better  and  hap- 
pier. But  all  their  requirements  converge  onto  the  unspecialized 
child  or  citizen  to  whom  none  of  them  are  easy.  A  spread  of  the 
spirit  of  Economy  in  this  respect,  a  common-sense  which  shall  pre- 
vent each  specialist  from  asking  or  obtaining  more  than  his  fair 
share  of  his  neighbor's  painful  effort,  is  a  very  real  necessity  at  our 
present  stage  of  democratic  evolution. 

Yet  the  conceptions,  both  of  the  Mean  and  of  Economy,  neces- 
sary as  they  are  for  every  Organization  which  regulates  our  rela- 
tions to  our  neighbors,  still  leave  something  undescribed  which  we 
feel  to  be  an  essential  condition  of  the  good  life.    Aristotle,  in  one 


250     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  those  conversational  flashes  which  lie  in  wait  for  his  readers  on 
almost  every  page  of  the  Ethics,  says:  "Virtue  is  rightly  defined  as 
a  Mean,  and  yet  in  so  far  as  it  aims  at  the  highest  excellence,  it  is 
an  Extreme."  No  social  organization  is,  we  feel,  good  which  does 
not  contain  that  element  which  Aristotle  here  calls  the  Extreme. 

If  I  try  to  make  for  myself  a  visual  picture  of  the  social  system 
which  I  should  desire  for  England  and  America,  there  comes  before 
me  a  recollection  of  those  Norwegian  towns  and  villages  where  every 
one,  the  shopkeepers  and  the  artisans,  the  schoolmaster,  the  boy 
who  drove  the  post-ponies,  and  the  student  daughter  of  the  inn- 
keeper who  took  round  the  potatoes,  seemed  to  respect  themselves, 
to  be  capable  of  Happiness  as  well  as  of  pleasure  and  excitement, 
because  they  were  near  the  Mean  in  the  employment  of  all  their 
faculties.  I  can  imagine  such  people  learning  to  exploit  the  electric 
pov/er  from  their  waterfalls,  and  the  minerals  in  their  mountains, 
without  dividing  themselves  into  dehumanized  employers  or  offi- 
cials, and  equally  dehumanized  ''hands."  But  I  recollect  also  that 
the  very  salt  and  savor  of  Norwegian  life  depends  on  the  fact  that 
poets,  and  artists,  and  statesmen  have  worked  in  Norway  with  a 
devotion  which  was  not  directed  by  any  formula  of  moderation. 
When  I  talk  to  a  New  Zealander  about  the  future  of  his  country, 
and  about  the  example  which  she  is  creating  of  a  society  based  upon 
the  avoidance  both  of  destitution  and  superfluity,  I  sometimes  feel 
that  she  may  have  still  to  learn  that  the  Extreme  as  a  personal 
ideal  for  those  v/ho  are  called  by  it  is  a  necessary  complement  of 
the  Mean  in  public  policy. 

Helen  Marot:  Why  Reform  Is  Futile^ 

If  workmen  petition  employers  or  state  legislatures  for  an  eight- 
hour  day,  they  may  be  deported  or  they  may  be  jailed,  but  they  are 
not  hanged  as  they  were  thirty  years  ago  in  Chicago.  Credit  for 
this  evidence  of  progress  goes  to  the  labor  unions,  as  it  should,  but 
some  generous  recognition  is  also  due  those  social  reformers  who 
have  advocated  state  protection  for  wage  workers,  and  government 
control  of  financial  operations  as  efficient  and  ethical  principles  of 
statecraft.  These  reformers  for  many  years  have  given  unreinitting 
energy,  in  and  out  of  legislatures,  to  campaigns  which  they  have 
hoped  would  eventually  result  in  the  adoption  of  a  national  policy 
of  industrial  reform  by  way  of  protective  enactments.  I  speak  of 
these  reforms  now  because  of  the  unexpected  opportunity  we  have 
been  given  to  estimate  the  power  of  labor  legislation  to  bring  about 
change  in  our  industrial  habits  and  national  manners. 
*  Reprinted  by  permission  from  The  Dial,  March  22,  1919,  p.  293. 


PROPOSED  PLANS  OF  ACTION  251 

Good  people  in  the  early  days  of  the  factory  system  were  shocked 
by  the  long  hours  of  labor  and  the  long  absences  from  home  which 
factory  operations  required.  Some  time  later  practical  men  came 
to  the  rescue  of  the  idealists  as  they  pointed  out  that  long  hours  of 
labor  meant  in  the  end  the  political  and  industrial  inefficiency  of 
the  nation.  Many  years  of  reform  campaign  went  by  before  the 
promoters  were  given  a  full  hearing,  because  labor  in  spite  of  the 
wear  and  tear  of  factory  life  continued  its  flow  to  the  satisfaction  of 
business  demands,  which  are  concerned  with  the  immediate  situa- 
tion and  not  the  future  of  a  people.  But  suddenly  the  valiant  hopes 
of  the  reformers  achieved  an  apparent  glory  of  realization.  The  oc- 
casion came  as  a  surprise  because  the  cause  of  it  had  less  to  do  with 
the  development  of  events  Vv'ithin  the  reform  movement  than  with 
the  misfortunes  of  the  Republican  party.  It  was  estimated  by  the 
recalcitrants  of  that  party  that  the  new  party  which  they  formed 
would  stand  its  best  chance  of  swinging  into  power  if  it  adopted  the 
labor  legislative  program  of  the  reformers.  Thousands  of  men  and 
women  with  deep  conviction  as  to  the  righteousness  of  their  cause 
pledged  the  Progressive  part}''  their  active  support  and  gave  it  their 
vote. 

The  popularity  of  the  measures  for  which  this  party  stood  is  not 
to  be  judged  by  the  failure  of  the  party  to  carry  the  election  or  to 
weather  a  second  presidential  campaign.  The  test  of  the  popular 
support  must  be  estimated  rather  by  the  inability  of  the  Democratic 
party  to  win  any  election  if  it  rejected  these  measures.  Further- 
more, its  leaders  discovered  later  that  their  endorsement  of  state  in- 
terference in  industry  and  of  privilege  for  the  working  man,  opposed 
as  these  measures  were  to  traditional  policies  of  the  party,  was  not 
to  end  with  election  promises  or  the  writing  of  platform  planks.  The 
full  irony  of  the  situation  appeared  when  the  Democratic  adminis- 
tration representing  the  party  in  power  was  compelled  during  the 
war  period  to  put  into  actual  practice  those  reform  measures  and 
to  extend  their  application  beyond  the  anticipation  of  their  advo- 
cates. 

It  was  clear  beyond  dispute  that  the  successful  operation  of  the 
war  industries  could  not  be  left  to  employers,  and  that  labor  must  be 
placated.  This  delicate  task  the  government  was  forced  to  take  over 
and  to  take  over  with  the  assistance  of  the  reformers  who  had  their 
policy  of  state  interference  fully  evolved.  So  far  as  I  can  remember 
every  demand  which  the  reformers  had  made  during  the  preceding 
decade  was  echoed  in  the  reorganization  and  the  extended  activities 
of  the  Department  of  Labor,  as  well  as  in  the  other  departments,  war 
councils,  and  committees  which  were  engaged  in  the  production  di- 
rectly and  indirectly  of  war  materials.     I  do  not  say  that  the  ideals 


2  52      CURRENT  SOCIAL  AND  INDUSTRML  FORCES 

of  the  reformers  were  realized  in  any  case,  nor  was  there  time  for 
their  full  realization.  My  point  is  that  all  the  measures  which  had 
been  advocated  were  given  official  recognition,  that  labor  reform 
administrators  were  appointed  to  deal  with  them,  that  an  under- 
standing was  gained  as  to  what  the  measures  stood  to  accomplish. 
A  system  of  federal  employment  exchanges  was  promoted,  for  which 
the  reformers  had  for  a  long  time  contended,  and  the  private  agencies 
exterminated.  A  War  Labor  Board  was  created  for  the  settlement 
of  wage  conditions  by  means  of  collective  bargaining  and  arbitra- 
tion. Special  councils  were  organized  to  look  after  the  special  needs 
of  women  and  young  persons  as  well  as  the  health  and  safety  of  all 
wage  earners  in  the  workshops.  Provisions  for  the  extension  of 
sanitation  to  the  homes  of  the  workers  were  also  made.  There  was 
added  to  the  councils  charged  with  the  administration  of  the  reform 
measures  another  council  which  was  concerned  with  the  formulation 
of  a  policy  of  government  regulation  and  control  of  labor  conditions. 
This  wholesale  extension  of  protection  to  labor  was  inaugurated  for 
the  purpose  of  war. 

Three  months  have  elapsed  since  the  signing  of  the  armistice,  and 
while  there  is  still  a  trace  of  these  reform  agencies  and  some  pale 
evidence  of  their  continued  activity,  it  must  have  become  clear  to 
the  reformers  themselves  that  their  method  of  social  reorganization 
will  not  materially  alter  the  operation  of  the  laws  of  the  national 
economy  which  we  have  set  up  and  which  we  support.  The  sudden 
collapse  of  the  policy  inaugurated  at  Washington  was  almost  as 
spectacular  a  performance  as  was  the  official  recognition  which  was 
given  it  in  19 12  and  19 17.  It  is  rumored  that  a  revival  of  this  war- 
time government  machinery  may  be  undertaken  if  unemployment 
and  business  stagnation  lead  to  serious  strikes  and  to  business  de- 
mands for  increase  of  privilege  and  subsidy. 

But  machinery  set  up  for  war  will  not  serve  peace  because  the 
driving  force  of  the  war  machinery,  which  was  war  patriotism,  rep- 
resents an  actual  horsepower  which  business  animus,  the  driving 
force  of  industry  in  times  of  peace,  fails  to  induce.  As  the  war  came 
to  a  close  and  the  wartime  patriotism  lost  its  force,  so  did  the  man- 
datory influence  of  the  War  Labor  Board.  New  wage  boards  may 
be  created  and  special  protection  given  business  and  labor  "for  the 
transition  period,"  but  what  reason  is  there  to  believe  that  these  can 
be  developed  as  a  national  policy?  or  if  they  are,  that  they  will 
change  the  relative  position  of  capital  and  labor?  The  actual  ac- 
complishment in  legislative  regulation  of  the  hours  of  women  work- 
ers in  the  last  decade  is  as  follows:  in  ten  states  women  may  work 
seventy  hours  or  more;  in  twenty-one  states  they  may  work  any- 
where from  fifty-five  hours  to  seventy;  and  in  fifteen  states  from 


PROPOSED  PLANS  OF  ACTION  253 

fifty-five  to  forty-eight.  In  respect  to  the  minimum  wage  there  are 
twelve  states  out  of  the  forty-eight  which  have  given  it  their  en- 
dorsement. But  this  lack  of  legislative  accomplishment  presents  a 
less  complete  picture  of  the  uphill  character  of  the  reform  movement 
than  the  persistent  difficulties  with  which  the  movement  is  beset  in 
the  way  of  enforcement. 

And  were  it  possible  to  overcome  the  difficulties  of  enactment  and 
enforcement,  labor  would  still  have  the  bill  to  pay  for  the  sick  insur- 
ance it  received,  for  its  sanitary  privileges,  its  increase  in  wages,  and 
its  decreased  hours  of  work.  An  award  in  hours  may  be  paid  for  in 
wages  or  the  burden  of  an  award  in  both  hours  and  wages  can  be 
shifted  through  an  increase  in  rents,  food,  or  clothing,  through  labor- 
saving  devices  which  result  in  the  decrease  in  the  wage  rate  or  in  the 
annual  wage  income.  There  is  often  an  appearance  of  economic  gain 
for  labor  when  an  award  is  made  by  a  state  legislature  or  by  a 
union,  but  the  net  result  is  usually  the  avoidance  of  cost  by  vested 
interests  without  relative  gain  in  labor's  position. 

The  reformers,  in  their  desire  to  put  the  industrial  situation  to 
rights,  have  undertaken  to  accomplish  their  end  by  the  indirect  road 
of  political  action.  They  have  done  this  because  it  was  the  only 
road  open  to  them,  as  they  are  not  a  part  of  industry  and  cannot 
function  through  it.  If  society  were  so  organized  that  all  the  mem- 
bers of  it  were  engaged  in  some  productive  occupation  or  creative 
work,  the  sole  business  of  the  government  under  these  circumstances 
would  be  to  open  up  every  opportunity  for  all  the  members  to  func- 
tion to  the  limit  of  their  capacity.  As  the  situation  is  now,  the  re- 
form movement  represents  a  policy  of  the  unlimited  extension  of 
the  government's  police  function ;  it  represents  a  method  of  negation 
and  indirection. 

All  economists,  hard-thinking  business  men,  and  wage  earners 
know  that  the  roots  of  the  labor  legislative  reform  movement  are 
too  tender  to  penetrate  beyond  the  surface  of  our  political  and  in- 
dustrial institutions.  To  put  this  familiar  matter  once  more,  quite 
simply  it  is  this:  while  natural  wealth  is  without  approximate  limit, 
the  sources  of  wealth  by  the  act  of  the  state  become  the  private  pos- 
session of  men  who  can  show  credit  for  a  financial  equivalent.  This 
credit  is  given  not  to  those  who  can  show  productive  ability  but  to 
those  who  have  already  received  credit.  The  manipulation  of  this 
wealth  which  represents  control  over  industrial  enterprise  is  carried 
on  first  and  naturally  in  the  interest  of  the  manipulators,  the  people 
who  have  been  given  and  can  give  credit.  These  creditors  assume, 
as  they  say,  "the  stewardship"  of  all  the  national  wealth  which  they 
receive,  and  by  the  law  of  the  land  it  is  theirs  to  do  with  as  they 
please.    The  position  of  the  reformers  is  anomalous  as  they  invoke 


254     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

this  same  law  for  labor  concessions.  It  is  extremely  embarrassing 
for  the  state  to  recognize  the  invocation,  as  it  places  it  virtually  in 
the  position  of  "Injun  giver."  The  reformers  are  in  the  position  of 
suppliants  who  come  with  claims  to  what  has  already  been  disposed 
of.  They  do  not  ask  for  a  return  of  the  common  wealth  to  labor,  on 
the  ground  that  access  to  wealth  should  be  free  and  control  over 
production  extended  to  those  who  can  prove  their  ability  to  carry 
forward  the  undertaking.  And  why  should  they?  Labor  has  shown 
no  disposition  to  undertake  it.  This  indisposition  of  labor  is  in 
part  the  raison-d'etre  of  the  reformer.  It  is  the  story  of  the  people 
who  do  not  attend  to  their  own  affairs  and  of  the  other  people  who 
m.ake  an  attempt  to  do  it  for  them.  It  is  the  experience  of  the  ages 
that  such  attention  meets  with  indifferent  results. 

It  may  be  that  the  situation  in  which  labor  finds  itself  and  which 
it  is  called  upon  to  reshape,  if  it  is  to  prove  its  capacity  for  self-gov- 
ernment, is  actually  too  difficult  an  environment  for  it  to  affect. 
This  is  the  supposition  of  the  reformers  who  argue  that  if  labor  had 
more  leisure,  say  sixteen  hours'  absence  from  work,  and  a  living  wage, 
it  would  be  in  a  position  to  affect  its  environment.  The  facts  hardly 
bear  out  this  argument.  The  present  social  environment  seems  en- 
tirely safe  in  the  hands  of  the  countless  thousands  of  skilled  me- 
chanics, clerks,  and  superintendents,  for  instance,  who  live  above  the 
region  of  the  financially  submerged  worker.  These  skilled  me- 
chanics, clerks,  and  superintendents  who  enjoy  a  greater  purchasing 
power  show  no  greater  disposition  as  a  class  of  people  to  alter  then 
industrial  status  than  does  the  class  of  workers  who  are  economically 
the  most  helpless.  Although  the  economic  position  of  individuals  ii) 
in  a  constant  state  of  change,  it  has  not  been  possible  for  them  to 
overcome  the  conditions  of  the  environment  as  they  are  fixed.  The 
established  industrial  institution  is  successfully  maintained  with  its 
definite  status  for  the  workers.  And  this  state  of  affairs  is  bound  to 
continue  in  spite  of  the  interminable  propaganda  of  reformers  and 
the  intellectual  expositions  of  the  economists,  until  the  institution 
through  some  internal  infirmity  of  its  own  gives  way. 

Santayana  has  said  "the  real  difficulty  in  man's  estate,  the  true 
danger  to  his  vitality,  lies  not  in  want  of  work  but  in  so  colossal  a 
disproportion  between  demand  and  opportunity  that  the  ideal  is 
stunned  out  of  existence  and  perishes  for  want  of  hope.  The  life 
of  reason  is  continually  beaten  back  upon  its  animal  sources,  and 
nations  are  submerged  in  deluge  after  deluge  of  barbarism.  .  .  .  The 
ideal  requires,  then,  that  opportunities  should  be  offered  for  realiz- 
ing it  through  action,  and  that  transition  should  be  possible  from  a 
given  state  of  things." 

I  think  history  goes  to  show  that  progress  has  been  made,  not 


PROPOSED  PLANS  OF  ACTION  255 

through  any  instinct  or  passion  of  a  people  for  the  abstraction  of 
justice  or  democracy,  but  through  the  failure  of  the  established  in- 
stitution to  function.  The  truth  of  the  matter  seems  to  be  that  the 
social  environment  in  which  the  mass  of  men  have  found  themselves 
from  time  to  time  has  been  too  difficult  for  them  to  affect  except  at 
those  propitious  moments  when  the  conditions  which  have  inhibited 
action  have  broken  down  of  their  own  weight.  These  times  in  the 
nature  of  the  case  seem  destined  to  appear  for  the  reason  that  the 
social  environment  is  a  condition  of  interdependence  of  a  people. 
As  population  changes  or  expands,  as  new  relations  evolve,  interde- 
pendence and  the  fixed  conditions  of  the  old  environment  fail  to 
meet  the  needs  of  the  new.  Never  has  the  truth  of  this  been  so 
clearly  demonstrated  as  now,  because  never  has  the  interdependence 
of  people  been  so  widely  extended. 

Our  present  industrial  infirmity  is  due  to  the  failure  of  the  insti- 
tutional order  to  secure  the  cooperation  of  labor  in  the  enterprise  of 
wealth  production.  This  failure  is  a  sign  that  the  interdependence 
of  the  productive  factors  has  become  a  matter  of  consciousness. 
This  has  come  about  in  part  through  the  restlessness  of  the  factors, 
through  their  increased  movement  and  the  interchange  in  the  per- 
sonnel of  groups,  but  it  is  due  primarily  to  the  realization  that  the 
further  promotion  of  industry  is  now  actually  dependent  on  an  econ- 
omy in  the  use  of  labor  energy.  The  old  scheme  of  business  man- 
agement cannot  satisfy  the  need  for  the  economy  or  omit  the  neces- 
sity of  turning  that  restlesness  into  active  cooperation.  It  cannot 
be  met  by  the  substitution  this  time  of  machines  for  men.  It  must 
be  met  by  the  men  themselves.  Industry  has  become  too  vast  a 
burden,  as  it  is  being  extended,  for  its  promoters  to  carry  it  forward 
against  the  disinclination  of  the  mass  of  people  involved.  The  in- 
dustrial order  is  passing  through  a  crisis  as  it  is  faced  with  new 
world  conditions.  Even  the  financiers  have  some  appreciation  of 
the  fact  that  the  old  habits  and  processes  which  have  served  them 
call  for  revision.  Their  production  managers,  expert  in  the 
industrial  processes  and  the  estimation  of  costs,  have  dem- 
onstrated that  new  methods  of  manufacture  can  be  in- 
troduced which  will  effect  a  saving  as  great  as  that  se- 
cured by  the  steam  engine.  The  point  in  this  discovery  which  is 
pertinent  for  all  who  are  interested  in  industrial  reorganization  is 
that  it  proposes  not  a  substitution  of  some  other  energy  for  human 
energy  but  a  new  distribution  of  the  energy  of  labor.  This  new  dis- 
tribution can  show  not  only  an  increase  in  output  and  a  decrease  in 
cost  but  a  greater  reduction  in  working  hours  than  either  reformers 
or  trade  unionists  in  their  modesty  or  consideration  here  thought  fit 
to  demand.    This  discovery  involves  no  capital  investment  or  extra 


2S6      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

financial  credit.  It  is  entirely  possible  for  labor  in  its  organized  ca- 
pacity to  make  it  its  own.  It  is  possible  for  organized  labor  to  agree 
to  deliver  the  greater  output  which  results  from  its  own  saving  in 
workshop  energy,  and  stipulate  that  on  delivery  its  own  saving  of 
its  own  energy  shall  not  be  appropriated  by  others. 

The  recognition  of  the  need  of  labor's  cooperation  in  the  new 
methods  of  industrial  economy  introduces  the  condition  which  makes 
possible  the  workers'  assumption  of  responsibility  for  the  promotion 
of  wealth.  The  recognition  indeed  creates  an  environment  which  it 
is  possible  for  labor  to  affect.  Here  we  have  the  conditions  of  the 
new  industrial  psychology  brought  about  by  fundamental  require- 
ments in  the  social  economy.  The  realization  of  these  conditions 
will  provide  an  environment  in  which  industrial  democracy  will  have 
opportunity  to  develop. 

WTiile  the  reformers'  program  is  without  economic  sanction  ac- 
cording to  the  laws  of  our  industrial  institution  as  that  is  now  run; 
while  it  is  without  important  material  results  for  the  workers;  while 
it  tends  to  convert  the  government  into  a  police  organization;  while 
it  contributes  nothing  constructive  to  the  actual  business  of  wealth 
production ;  it  has  served  a  beneficial  purpose  as  it  has  prevented  up- 
holders of  our  institutions  from  sinking  into  a  hopeless  state  of  smug 
satisfaction.  It  has  induced  a  certain  amount  of  the  restlessness, 
much  explanation  and  examination  of  industrial  practice.  More  than 
this,  while  the  reform  movement  represents  a  large  expenditure  of 
energy  for  small  returns,  waste  activity  is  an  inevitable  condition  of 
growth.  The  trial  and  error  experience  prevails  even  where  reason 
and  creative  effort  have  had  a  chance. 

Robert  F,  Hoxie:  Trade  Unionism  in  the  United 
States*  (p.  372) 

The  fault  of  reformers  is  not  that  they  act,  but  that  they  act 
blindly  and  act  only,  that  they  do  not  see  the  whole  of  the  social 
situation  back  of  the  particular  incident,  that  they  do  not  try  to 
grasp  this  whole  in  the  intervals,  or  try  to  formulate  principles  of 
action  from  them.  Being  simply  spasmodic  and  particularistic,  re- 
garding each  struggle  as  a  case  by  itself,  they  do  not  make  any  gen- 
eral advance.  The  trouble  with  most  people  who  make  proposals  in 
the  labor  field  is  that  they  do  not  understand  the  broad  features  and 
forces  with  which  they  have  to  deal.  They  do  not  know,  therefore, 
what  ought  to  be  done,  and  if  they  find  anything  that  apparently 
ought  to  be  done,  they  naively  assume  that  because  it  ought  to  be 
done,  it  can  be  done.  If  men  in  society  were  mere  pawns  to  be 
♦  Copyright,  1917,  by  D.  Appleton  &  Company.   Reprinted  by  permission. 


PROPOSED  PLANS  OF  ACTION  257 

moved  about  the  board  and  if  their  only  good  was  their  immediate 
material  betterment,  and  if  reformers  were  omniscient  and  had  the 
power  of  God,  this  would  be  all  right.  But  none  of  these  things 
are  true.  Men  have  their  own  ideas  as  to  what  is  good  for  them 
and  how  to  secure  it.  And  in  a  democracy  you  cannot  give  men 
what  is  for  their  good  except  by  their  consent  and  by  moving  them 
to  go  out  and  get  it.  Trade  unionism  is  a  self-help  institution.  The 
trade  unionists  want,  not  charity,  not  patronage,  but  justice.  He 
prefers  to  get  that  by  his  own  efforts.  He  does  not  want  patron- 
age, however  good  its  objective  results.  He  has  no  sympathy  with 
the  people  or  forces  which  would  reach  down  to  help  him  from 
above.  To  know  what  ought  to  be  done  for  the  worker,  we  must 
know  the  men  themselves,  their  ideas,  ideals,  purposes,  and  ways  of 
looking  at  things;  the  relationships  that  actually  exist  among  them 
and  how  they  view  these  relationships  and  why. 

.  .  .  Our  labor  laws  are  built  up  haphazard,  due  to  emotionalism 
after  some  disaster  or  revelation;  they  are  a  heterogeneous  and  fre- 
quently contradictory  mass.  Minutely  specific  and  therefore  in- 
elastic and  inadaptable,  they  are  therefore  often  unenforceable,  and 
often,  if  enforced,  unjust  to  employers  and  harmful  to  the  workers. 
They  show  no  provision,  no  program,  no  consistency  in  the  same 
state  or  as  between  states.  .  .  . 

We  must  have  means  for  developing  a  body  of  exact  and  truthful 
information,  developing  common  standards  of  right  and  justice 
(maxima  and  minima  or  rules  of  the  game)  developing  a  real  public 
opinion  back  of  them,  developing  a  constructive  social  program,  get- 
ting centralized,  strong,  able,  elastic  administration  and  enforcement 
of  laws,  with  a  view  to  the  whole  situation;  getting  and  applying 
knowledge  and  standards  to  control,  and  in  the  settlement  of  con- 
tests, creating  to  this  end  social  interaction.  This  understanding  and 
knowledge  can  be  secured  only  by  the  closest  first-hand  study  in  the 
field.  It  is  all  a  matter  of  doing  the  work  in  a  calm,  orderly',  large- 
minded,  and  far-sighted,  constructive  and  scientific  manner. 

Herbert  Croly:  The  Promise  of  American  Life  * 
(pp.  142-152) 

It  is  in  a  sense  a  misnomer  to  write  of  ''Reform"  as  a  single 
thing.  Reform  is,  as  a  matter  of  fact,  all  sorts  of  things.  The 
name  has  been  applied  to  a  number  of  separate  political  agitations, 
which  have  been  started  by  different  people  at  different  times  in 
different  parts  of  the  country,  and  these  separate  movements  have 

*  Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 


2S8     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

secured  very  different  kinds  of  support,  and  have  run  very  different 
courses.  Tariff  reform,  for  instance,  was  an  early  and  popular  agi- 
tation whose  peculiarity  has  consisted  in  securing  the  support  of  one 
of  the  two  national  parties,  but  which  in  spite  of  that  support  has 
so  far  made  little  substantial  progress.  Civil  service  reform,  on  the 
other  hand,  was  the  first  agitation  looking  in  the  direction  of  politi- 
cal purification.  The  early  reformers  believed  that  the  eradication 
of  the  spoils  system  would  deal  a  deadly  blow  at  political  corruption 
and  professional  politics.  But  although  they  have  been  fairly  suc- 
cessful in  establishing  the  ''merit"  system  in  the  various  public  of- 
fices, the  results  of  the  reform  have  not  equalled  the  promises  of  its 
advocates.  While  it  is  still  an  important  part  of  the  program  of 
reform  from  the  point  of  view  of  many  reformers,  it  has  recently 
been  overshadowed  by  other  issues.  It  does  not  provoke  either  as 
much  interest  as  it  did  or  as  much  opposition.  Municipal  reform 
has,  of  course,  almost  as  many  centers  of  agitation  as  there  are  cen- 
ters of  corruption — that  is,  large  municipalities  in  the  United  States, 
It  began  as  a  series  of  local  non-partisan  movements  for  the  enforce- 
ment of  the  laws,  the  dispossession  of  the  "rascals,"  and  the  business- 
like, efficient  administration  of  municipal  affairs;  but  the  reformers 
discovered  in  many  cases  that  municipal  corruption  could  not  be 
eradicated  without  the  reform  of  state  politics,  and  without  some 
drastic  purging  of  the  local  public  service  corporations.  They  have 
consequently  in  many  cases  enlarged  the  area  of  their  agitation;  but 
in  so  doing  they  have  become  divided  among  themselves,  and  their 
agitation  has  usually  lost  its  non-partisan  character.  Finally,  the 
agitation  against  the  trusts  has  developed  a  confused  hodge-podge  of 
harmless  and  deadly,  overlapping  and  mutually  exclusive,  remedies, 
which  are  the  cause  of  endless  disagreements.  Of  course  they  are 
all  for  the  People  and  against  the  Octopus,  but  beyond  this  precise 
and  comprehensive  statement  of  the  issue,  the  reformers  have  end- 
lessly different  views  about  the  nature  of  the  disease  and  the  se- 
verity of  the  necessary  remedy.  .  .  . 

Reformers  have  failed  for  the  most  part  to  reach  a  correct  diag- 
nosis of  existing  political  and  economic  abuses,  because  they  are 
almost  as  much  the  victim  of  perverted,  confused,  and  routine  habits 
of  political  thought  as  is  the  ordinary  politician.  They  have  es- 
chewed the  tradition  of  partisan  conformity  in  reference  to  contro- 
verted political  questions,  but  they  have  not  eschewed  a  still  more 
insidious  tradition  of  conformity — the  tradition  that  a  patriotic 
American  citizen  must  not  in  his  political  thinking  go  beyond  the 
formulas  consecrated  in  the  sacred  American  writings.  They  adhere 
to  the  stupefying  rule  that  the  good  Fathers  of  the  Republic  re- 
lieved their  children  from  the  necessity  of  vigorous,  independent, 


PROPOSED  PLANS  OF  ACTION  259 

or  consistent  thinking  in  political  matters — that  it  is  the  duty  of 
their  loyal  children  to  repeat  the  sacred  words  and  then  await  a 
miraculous  consummation  of  individual  and  social  prosperity.  Ac- 
cordingly, all  the  leading  reformers  begin  by  piously  reiterating  cer- 
tain phrases  about  equal  rights  for  all  and  special  privileges  for  none, 
and  of  government  of  the  people,  by  the  people,  and  for  the  people. 
Having  in  this  way  proved  their  fundamental  political  orthodoxy, 
they  proceed  to  interpret  the  phrases  according  to  their  personal, 
class,  local,  and  partisan  preconceptions  and  interests.  They  have 
never  stopped  to  inquire  whether  the  principle  of  equal  rights  in  its 
actual  embodiment  in  American  institutional  and  political  practice 
has  not  been  partly  responsible  for  some  of  the  existing  abuses, 
whether  it  is  either  a  safe  or  a  sufficient  platform  for  a  reforming 
movement,  and  whether  its  continued  proclamation  as  the  funda- 
mental political  principle  of  a  democracy  will  help  or  hinder  the 
hijrher  democratic  consummation.  Their  unquestioning  orthodoxy 
in  this  respect  has  made  them  faithless  both  to  their  own  personal 
interest  as  reformers  and  to  the  cause  of  reform.  Reform  exclu- 
sively as  a  moral  protest  and  awakening  is  condemned  to  sterility. 
Reformers  exclusively  as  moral  protestants  and  purifiers  are  con- 
demned to  misdirected  effort,  to  an  illiberal  puritanism,  and  to  per- 
sonal self-stultification.  Reform  must  necessarily  mean  an  intellec- 
tual as  well  as  a  moral  challenge;  and  its  higher  purposes  will  never 
be  accomplished  unless  it  is  accompanied  by  a  masterful  and  jubi- 
lant intellectual  awakening. 

All  Americans,  whether  they  are  professed  politicians  or  reform- 
ers, ''predatory"  millionaires  or  common  people,  political  philoso- 
phers or  school  boys,  accept  the  principle  of  "equal  rights  for  all  and 
special  privileges  for  none"  as  the  absolutely  sufficient  rule  of  an 
American  democratic  political  system.  The  platforms  of  both 
parties  testify  on  its  behalf.  Corporation  lawyers  and  their  clients 
appear  frequently  to  believe  in  it.  Tam.many  offers  tribute  to  it 
during  every  local  political  campaign  in  New  York.  A  Democratic 
Senator,  in  the  intervals  between  his  votes  for  increased  duties  on 
the  products  of  his  state,  declares  it  to  be  the  summary  of  all  politi- 
cal wisdom.  The  fact  that  Mr.  Bryan  incorporates  it  in  most  of 
his  speeches  does  not  prevent  Mr.  Hearst  from  keeping  it  standing 
in  type  for  the  purpose  of  showing  how  very  American  the  American 
can  be.  The  fact  that  Mr.  Hearst  has  appropriated  it  with  the 
American  flag  as  beloncing  peculiarly  to  himself  has  not  prevented 
Mr.  Roosevelt  from  explaining  the  whole  of  his  policy  of  reform  as 
at  bottom  an  attempt  to  restore  a  "Square  Deal" — that  is,  a  condi- 
tion of  equal  rights  and  nonexisting  privileges.  More  radical  re- 
formers find  the  same  principle  equally  useful  for  their  own  pur- 


26o     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

poses.  Mr.  Frederick  C.  Howe,  in  his  "Hope  of  Democracy,"  bases 
an  elaborate  scheme  of  municipal  socialism  exclusively  upon  it.  Mr. 
William  Smythe,  in  his  "Constructive  Democracy,"  finds  warrant  in 
the  same  principle  for  the  immediate  purchase  by  the  central  gov- 
ernment of  the  railway  and  "trust"  franchises.  Mr.  Henry  George, 
Jr.,  in  his  "Menace  of  Privilege,"  asserts  that  the  plain  American 
citizen  can  never  enjoy  equality  of  rights  as  long  as  land,  mines, 
railroad  rights  of  way  and  terminals,  and  the  like  remain  in  the 
hands  of  private  OMTiers.  The  collectivist  socialists  are  no  less  cer- 
tain that  the  institution  of  private  property  necessarily  gives  some 
men  an  unjust  advantage  over  others.  There  is  no  extreme  of  radi- 
calism or  conservatism,  of  individualism  or  socialism,  of  Repub- 
licanism or  Democracy,  which  does  not  rest  its  argument  on  this 
one  consummate  principle. 

Harold  Steams:  Neglected  Causes  of  Fatigue  * 

(p.  348) 

One  clear  lesson  then  emerges.  That  lesson  is  that  from  the 
point  of  view  of  industrial  efficiency,  the  basic  essentials  of  the 
worker's  health  and  interest  are  just  so  many  preliminaries  to  the 
chief  problems.  When  these  are  won  there  remain  other  as  essen- 
tial, if  not  more  essential,  secondary  factors — subtler  and  to  a  cer- 
tain degree  incalculable.  If  they  exercised  only  a  controlling  influ- 
ence over  the  individual  worker's  happiness,  one  might  dismiss  them 
as  so  much  sentimental  irrelevance.  But  they  have  a  direct  and 
important  effect  on  production  itself.  They  have  the  social  impor- 
tance of  factors  which  give  a  steady  hastening  or  slackening  to  the 
creation  of  wealth.  They  emerge  from  that  more  indirect  yet  all- 
pervasive  economic  and  social  background  which  makes  up  the 
whole  drift  of  the  worker's  interest  and  energy.  In  a  word,  they 
cluster  around  the  reality  expressed  by  a  phrase  which  has  usually 
been  but  the  sterile  lip-worship  of  reactionaries,  the  dignity  of  labor. 
Even  with  an  eight-hour  day  and  a  reasonable  human  sense  of  ac- 
complishment in  the  work  itself,  even  with  the  pride  of  craftsman- 
ship, positive  physiological  fatigue  will  result  from  the  pressure  of 
outside  considerations.  Scientific  management  in  a  shop  or  factory 
may  eliminate  every  waste  movement  and  calculate  to  a  nicety  the 
necessary  period  for  recuperation  needed  by  the  human  body,  yet 
never  examine  the  ultimately  determining  factors  making  for  effi- 
ciency.   What  are  some  of  these  factors? 

First  of  all  is  the  hostility  of  labor  to  scientific  management  it- 
*  Reprinted  by  permission  from  New  Republic,  April  21,  1917. 


PROPOSED  PLANS  OF  ACTION  261 

self.  In  spite  of  repeated  warnings,  scientific  managers  persist  in 
the  Taylor  tradition.  Content  with  a  discredited  economic  theory 
of  the  perfect  adjustment  of  wages  from  a  free  interplay  of  supply 
and  demand,  they  continue  to  regard  workers  as  mere  factors  in 
production,  precisely  as  one  would  regard  lubricating  oil.  "The 
problem  of  scientific  industrial  management,  dealing  as  it  must  with 
the  human  machine,  is  fundamentally  a  problem  in  industrial  fa- 
tigue," says  one  of  Sir  George  Newman's  reports.  Now  it  is  not 
the  truth  or  falsity  of  such  a  generalization  which  arouses  labor's 
hostility,  it  is  the  tone;  and  only  the  stress  of  war  prevents  the  ex- 
pression by  English  trade  unionism  of  sharp  disagreement.  Fur- 
thermore, scientific  management  is  always  to  be  imposed  from  the 
top  and  controlled  from  the  top.  Scientific  managers  fail  to  see 
any  importance  in  workers  being  members  of  the  state,  with  the 
duties  and  privileges  due  them  as  citizens.  It  is  forgotten  that  we 
are  all  common  members  in  an  organized  body  that  is  supposed  to 
include,  on  an  equal  level,  both  the  workers  and  those  who  are  so 
solicitous  of  their  reaching  the  highest  point  of  efficiency  consistent 
with  health.  ''Collective  bargaining"  is  a  phrase  still  to  cause  the 
lifting  of  eyebrows.  Yet  only  democratic  control  of  scientific  man- 
agement will  in  the  long-run  sense  make  it  successful.  Without  the 
leavening  of  self-respect  which  comes  from  a  sense  of  cooperation, 
labor's  instinctive  prejudices  will  be  focused  and  its  unreasonable 
hostilities  intensified.  Even  the  narrowest  of  employers  who 
thought  only  of  getting  the  most  from  his  tactical  economic  posi- 
tion might  consider  whether  or  not  this  kind  of  vague,  ill-defined  but 
all-enshrouding  antagonism  conduces  to  efficiency.  The  temper  of 
latent  hostility  is  hardly  the  temper  of  rapid  production.  To  dis- 
cover some  working  agreement  between  democracy  and  science  is 
not  easy,  but  this  English  experience  sharply  reveals  to  us  that  we 
cannot  aft'ord  to  flinch  before  the  problem  just  because  it  is  difficult. 
Another  incalculable  factor  of  inefficiency  has  been  a  similar 
hostility  of  labor  towards  science  in  general.  Traditionally,  science 
has  meant  machines,  and  machines  have  meant  a  kind  of  competi- 
tion which  has  always  resulted  in  the  ultimate  defeat  of  the  worker — 
unemployment.  Science  has  meant  something  dehumanized,  imper- 
sonal and  cruel,  a  blind  force  indifferent  to  human  wishes  or  desires, 
something  to  be  fought  in  the  dark.  Sabotage  and  "ca-canny"  have 
not  always  sprung  from  a  sharply  formulated  theory  about  ex- 
ploitation. They  have  sprung  from  some  deep  human  protective 
instinct  against  the  encroachments  of  an  overshadowing,  devitalized 
method  of  production.  Yet  it  is  probably  true,  as  Miss  Goldmark 
believes,  that  this  feeling  is  mere  sentiment  which  will  disappear  with 
education.    The  nub  is  economic.    "It  has  happened,"  runs  a  frank 


262      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

passage  in  one  of  Sir  George  Newman's  reports,  "that,  rightly  or 
wrongly,  a  suspicion  has  grown  up  among  workers  that  any  device 
for  increasing  output  will  be  used  for  the  profit  of  the  employer 
rather  than  for  the  increased  health  or  comfort  of  the  workers."  Of 
course  we  are  thrown  back  to  a  survey  of  the  whole  complex  prob- 
lem of  the  distribution  of  wealth,  and  it  is  worth  observing  that 
mere  bonuses  for  invention  are  a  very  superficial  approach.  The 
relevancy  of  large-scale  agitation  and  ambitious  reform  to  actual 
physiological  fatigue  is  clear. 

But  perhaps  the  greatest  factor  making  directly  for  fatigue  and 
lassitude  is  the  sense  of  economic  insecurity.  Here,  too,  we  learn 
from  the  English  munition  workers  who  were  proud  in  their  knowl- 
edge that  what  they  did  was  precious,  and  that  no  reasonable  effort 
would,  in  all  human  probability,  result  in  irresponsible  discharge. 
That  was  a  fine  lever  of  efficiency.  For  nothing  is  so  terrible  as 
the  feeling  of  the  mere  fortuitousness  of  employment,  the  conscious- 
ness that  general  industrial  conditions — especially  those  in  the  sea- 
sonal trades — inevitably  produce  periods  of  slackness  and  conse- 
quent failure  to  get  a  job.  Even  the  shortest  of  working  days  will 
not  stimulate  the  worker  to  efficient  production  when  this  haunting 
fear  is  on  him.  He  is  inwardly  distressed  and  worried.  Attention 
will  wander;  accidents  will  take  place  for  no  apparent  reason;  there 
will  be  fumbling  and  muddle.  Nor,  to  a  sensitive  rnan,  is  there 
anything  more  rasping  than  to  be  told  by  all  the  powers  of  con- 
vention and  church  and  press  that  thrift  and  industry  invariably 
result  in  financial  security  and  success,  when  he  knows  the  bitter 
chance  quality  of  all  employment.  Perhaps  the  most  neglected  of 
the  humanizing  functions  of  the  trade  union  has  been  just  this 
making  articulate  of  common  grievances.  And  the  impatience  of 
labor  at  social  insurance  bespeaks  a  commendable  spirit.  Labor 
when  it  becomes  self-conscious  prefers  to  look  after  itself.  It  hates 
charity  as  it  does  the  devil.  Here  once  more  we  can  see  the  value 
of  arousing  a  vivid  interest  in  citizenship.  Because  as  soon  as  it  is 
recognized  that  the  stabilizing  of  employment  is  as  much  a  social 
matter  as  the  proper  control  of  public  utilities,  these  reforms  become 
the  legitimate  concern  of  all  citizens  of  the  state.  In  England  they 
feel  that  to-day;  in  time,  if  being  an  American  is  ever  to  mean 
having  an  economic  stake  in  America,  even  the  objections  of  Mr. 
Gompers  will  vanish.  It  is  a  tragic  paradox  that  the  loyalties  of 
workers  to  the  aids  and  realities  of  their  own  organizations  and 
class  have  no  counterpart  in  their  loyalty  to  that  vague  and  senti- 
mental entity  called  the  country.  Until  that  has  been  rectified  we 
shall  pay  a  heavy  price  in  industrial  inefficiency  for  the  privilege 
of  "hard  times"  and  their  inevitable  employment  insecurity. 


PROPOSED  PLANS  OF  ACTION  263 

A  final  factor  of  inefficiency  centers  around  what  Graham  Wallas 
might  call  the  disorganization  of  happiness,  the  lack  of  any  direct 
relation  between  work  and  enjoyment.  Happiness,  to  the  average 
low-paid  worker,  means  a  transient  snatch  of  the  unattainable. 
When  some  of  the  girls  in  the  New  York  Dress  and  Waist-Makers' 
Union  built  their  own  vacation  camp  in  the  Adirondacks  from  funds 
from  the  organization,  their  labor  took  on  a  new  dignity  and  mean- 
ing. They  became  "like  other  people";  false  class  barriers  disap- 
peared. The  increased  impulse  towards  efficiency  would  have  as- 
tonished the  scientific  m.anager  to  whom  restful  lunch  rooms  and 
perhaps  a  cup  of  hot  tea  in  the  afternoon  are  the  extremes  of  far- 
sightedness. But  the  vagueness  of  this  factor  of  inefficiency  cannot 
mitigate  its  importance.  What  is  called  "social  welfare"  work  in 
shops  often  defeats  its  own  ends.  It  is  resented  as  patronizing. 
Like  the  control  of  scientific  management,  the  organization  of  hap- 
piness must  be  from  within.  There  must  be  established  some  in- 
tegral relation  between  the  zest  and  drudgery  of  industrialism. 

Surveyed  singly,  these  are  factors  which  seem  almost  obvious. 
Vet  it  is  exactly  the  obvious  that  is  most  in  danger  of  being  forgot- 
ten. Investigators  of  the  intricacies  of  modern  production  are 
usually  classic  instances  of  those  who  cannot  see  the  forest  because 
of  the  trees.  We  may  be  forced  to  conclude  that  a  certain  degree 
of  machine  monotony  in  twentieth  century  civilization  is  inev- 
itable. Although  its  dreariest  extremes  are  being  proved  unprofit- 
able, specialization  seems  to  have  come  to  stay.  The  job  as  a  task 
will  probably  never  be  wholly  supplanted  by  the  job  as  an  aesthetic 
delight,  for  all  our  straining  and  effort.  Even  when  our  fight  for 
the  essential  decencies  of  life  has  been  won,  there  will  remain  an 
irreducible  minimum  of  staleness  and  fatigue.  And  here  emerges 
the  double  advantage  of  generous  help  and  encouragement  for  re- 
moving these  more  general  factors  of  inefficiency,  commensurate 
with  their  importance.  In  an  atmosphere  free  of  hostility  and  re- 
sentment, the  most  rigid  of  hard  labor  is  set  in  a  new  environment. 
There  is  a  whole  new  accent  and  approach.  The  detailed,  scientific 
student  is  justified  by  the  wider  theorist;  the  genius  of  the  general- 
izer  and  statesman  is  made  more  fertile  by  the  results  of  the  care- 
ful experimentalist.  Both  types  of  liberal  can  then  together  erect  a 
new  stage  setting  for  the  eternal  drama  of  labor. 


2.    SYNDICALISM 

Louis  Levine:  Syndicalism  in  France*  (pp.  123-140, 

218-222) 

When  the  General  Confederation  of  Labor  adopted  its  new 
constitution  in  1902  the  main  ideas  of  revolutionary  syndicalism 
had  already  been  clearly  formulated.  Since  then,  however,  a  con- 
siderable amount  of  literature  has  appeared  on  the  subject,  either 
clarifying,  or  further  developing  various  points  of  the  doctrine. 
This  literature  consists  mainly  of  numerous  articles  in  the  periodical 
press  and  of  pamphlets  and  is  accordingly  of  an  unsystematic  char- 
acter. The  attempt  is  made  in  this  chapter  to  sum  up  in  a  systematic 
way  the  leading  ideas  of  revolutionary  syndicalism  common  to  all 
who  call  themselves  revolutionary  syndicalists.  Consideration  of 
individual  ideas  and  of  contributions  of  particular  writers  will  be 
left  to  a  following  chapter. 

The  fundamental  idea  of  revolutionary  syndicalism  is  the  idea 
of  class-struggle.  Society  is  divided  into  two  classes,  the  class  of 
employers  who  possess  the  instruments  of  production  and  the  class 
of  workingmen  who  own  nothing  but  their  labor-power  and  who 
live  by  selling  it. 

Between  the  two  classes  an  incessant  struggle  is  going  on.  This 
struggle  is  a  fact,  not  a  theory  in  need  of  proof.  It  is  a  fact  mani- 
fested every  day  in  the  relations  between  employers  and  wage- 
earners,  a  fact  inherent  in  the  economic  organization  of  existing 
society. 

The  class-struggle  is  not  a  fact  to  be  deplored;  on  the  contrary, 
it  should  be  hailed  as  the  creative  force  in  society,  as  the  force 
which  is  working  for  the  emancipation  of  the  working  class.  It  is 
the  class-struggle  which  is  consolidating  the  workingmen  into  a  com- 
pact unity  opposed  to  the  exploitation  and  domination  of  employers. 
It  is  the  class-struggle  which  is  evolving  new  ideas  of  right  (droit) 
in  opposition  to  the  existing  law.  It  is  the  class-struggle  which  is 
developing  the  self -consciousness,  the  will-power  and  the  moral 
character  of  the  workingmen  and  is  creating  forms  of  organization 

*  Reprinted  by  permission  of  Columbia  University  Studies,  Faculty  of 
Political  Science,  Columbia  University,  Vol.  XLVI,  No.  lid 

264 


PROPOSED  PLANS  OF  ACTION  265 

proper  to  them.  In  a  word,  it  is  the  class-struggle  which  is  forging 
the  material  and  moral  means  of  emancipation  for  the  workingmen 
and  putting  these  weapons  into  their  hands. 

The  task  of  the  syndicalists  is  to  organize  the  more  or  less  vague 
class-feeling  of  the  workingmen  and  to  raise  it  to  the  clear  conscious- 
ness of  class-interests  and  of  class-ideals.  This  aim  can  be  attained 
only  by  reorganizing  the  workingmen  into  syndicats.  The  syndicat 
is  an  association  of  workingmen  of  the  same  or  of  similar  trades. 
It  is  a  grouping  held  together  by  bonds  of  common  interest,  and  in 
this  is  its  strength.  Of  all  human  groupings  it  is  the  most  funda- 
mental and  the  most  permanent,  because  men  in  society  are  inter- 
ested above  everything  else  in  the  satisfaction  of  their  economic 
needs. 

The  strength,  permanence,  and  class-character  of  economic  groups 
are  made  prominent  by  comparison  with  forms  of  grouping  based  on 
other  principles.  A  political  party,  a  group  of  idealists,  a  commu- 
nity professing  a  common  creed,  these  are  associations  which  can- 
not but  be  weak  and  transient  in  view  of  their  heterogeneous  com- 
position and  of  the  accidental  character  of  their  bond  of  union. 
Political  bodies,  for  instance,  are  made  up  of  men  of  various  inter- 
ests grouped  only  by  community  of  ideas.  Even  the  Socialist  party 
consists  of  manufacturers,  financiers,  doctors,  lawyers  as  well  as  of 
workingmen,  and  cannot,  therefore,  make  prominent  the  class-divi- 
sion of  society.  On  the  contrary,  it  tends  to  merge  all  classes  into 
one  conglomeration,  and  is,  therefore,  unstable  and  incapable  of 
persistent  collective  action.  Only  in  groupings  of  real  and  funda- 
mental interests  such  as  the  syndicats,  are  men  of  the  same  condi- 
tions brought  together  for  purposes  inextricably  bound  up  with  life. 

The  syndicat  groups  men  of  one  and  the  same  trade  in  their 
capacity  of  workingmen  only,  regardless  of  any  other  qualifications. 
The  workingmen  entering  a  syndicat  may  be  Catholics  or  Prot- 
estants, Republicans,  Socialists,  or  Monarchists;  they  may  be  of 
q,ny  color,  race,  or  nationality;  in  their  capacity  of  workingmen 
they  are  all  equally  welcome  and  legitimate  members  of  the  syn- 
dicat. A  workingman  enrolling  in  a  syndicat  is  not  entering  a 
party,  not  subscribing  to  a  platform,  nor  accepting  a  creed.  He  is 
simply  entering  into  a  relation  which  is  forced  upon  him  by  his 
very  position  in  society,  and  is  grouping  himself  with  his  fellowmen 
in  such  a  way  as  to  derive  more  strength  for  himself  in  the  struggle 
for  existence  contributing  at  the  same  time  to  the  strength  of  his 
fellowmen. 

These  conditions  make  the  syndicat  peculiarly  fit  to  serve  the 
^terests  of  the  workingmen.  The  syndicat  is  a  sphere  of  influence 
Vhich  by  the  volume  of  its  suggestion  and  by  the  constancy  and 


266     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

intensity  of  its  action  shapes  the  feelings  and  ideas  of  the  working- 
men  after  a  certain  pattern.  In  the  syndicat  the  workingmen  for- 
get the  things  which  divide  them  and  are  intent  upon  that  which 
unites  them.  In  the  syndicat  the  workingmen  meet  to  consider 
common  interests,  to  discuss  their  identical  situation,  to  plan  to- 
gether for  defense  and  aggression,  and  in  all  ways  are  made  to  feel 
their  group-solidarity  and  their  antagonism  to  the  class  of  em- 
ployers. 

In  view  of  this  the  syndicats  should  prefer  industrial  unionism 
to  craft  unionism.  The  separation  of  workingmen  into  trades  is 
apt  to  develop  in  them  a  corporate  spirit  which  is  not  in  harmony 
with  the  class  idea.  The  industrial  union,  on  the  contrary,  widens 
the  mental  horizon  of  the  workingman  and  his  range  of  solidarity 
with  his  fellow  workingmen  and  thus  serves  better  to  strengthen  his 
class  consciousness. 

The  syndicat  is  the  instrument  with  which  the  workingman  can 
enter  into  a  ''direct"  struggle  with  employers.  "Direct  action"  is 
what  the  syndicalists  most  insist  upon,  as  the  only  means  of  educat- 
ing the  workingmen  and  of  preparing  them  for  the  final  act  of  eman- 
cipation. "Direct  action"  is  action  by  the  workingmen  themselves, 
without  the  help  of  intermediaries;  it  is  not  necessarily  violent  ac- 
tion, though  it  may  assume  violent  forms;  it  is  the  manifestation 
of  the  consciousness  and  of  the  will  of  the  workingmen  themselves, 
without  the  intervention  of  an  external  agent:  it  consists  in  pressure 
exerted  directly  by  those  interested  for  the  sake  of  obtaining  the 
ends  in  view. 

"Direct  action"  may  assume  various  forms,  but  the  principal 
ones  in  the  struggle  against  employers  are:  the  strike,  the  boycott, 
the  label,  and  sabotage. 

The  strike,  in  the  view  of  the  syndicalist,  is  the  manifestation 
of  the  class-struggle  par  excellence.  The  strike  brings  the  working- 
men  face  to  face  with  the  employers  in  a  clash  of  interests.  A  strike 
clears  up,  as  if  by  a  flash  of  lightning,  the  deep  antagonism  which 
exists  between  those  who  employ  and  those  who  work  for  employers. 
It  further  deepens  the  chasm  between  them,  consolidating  the  em- 
ployers on  the  one  hand,  and  the  workingmen  on  the  other,  over 
against  one  another.  It  is,  thus,  a  revolutionary  fact  of  great 
value. 

All  strikes,  partial,  general  in  a  locality,  or  general  in  some  one 
trade,  have  this  revolutionary  influence,  particularly  when  they  are 
conducted  in  a  certain  way.  If  the  workingmen  rely  only  on  their 
treasury,  the  strike  degenerates  into  a  mere  contest  between  two 
money  bags— that  of  the  employer  and  that  of  the  syndicat — and 
loses  much  of  its  value.     Still  more  are  the  syndicalists  opposed  to 


PROPOSED  PLANS  OF  ACTION  267 

methods  of  conciliation  and  of  arbitration.  The  idea  of  the  revo- 
lutionary syndicalists  is  that  a  strike  should  be  won  by  Sturm  und 
Drang,  by  quick  and  energetic  pressure  on  employers.  The  finan- 
cial strength  of  workingmen  when  striking  should  not  be  considered. 
Money  may  be  supplied  by  contributions  of  workingmen  of  other 
trades  and  localities,  in  itself  another  means  of  developing  the  soli- 
darity of  the  working  class.  Sometimes  a  strike  may  be  won  by 
calling  out  sympathetic  strikes  in  other  trades. 

Strikes  conducted  in  this  manner  yield  practical  results  and 
serve  also  as  means  of  educating  the  workingmen.  They  reveal  to 
the  workingmen  their  power,  as  producers,  and  their  importance  in 
the  productive  system  of  society.  The  label,  on  the  other  hand,  is 
a  means  of  bringing  home  to  the  workingmen  their  importance  as 
consumers,  and  of  making  them  wield  this  power  for  their  own 
benefit. 

The  boycott  reveals  the  power  of  the  workingmen,  either  as  pro- 
ducers or  as  consumers.  It  may  be  wielded  against  an  employer 
whose  shop  is  avoided,  or  against  a  firm  in  its  capacity  as  seller.  It 
is  an  effective  means  of  forcing  employers  to  come  to  terms. 

Sabotage  consists  in  obstructing  in  all  possible  ways  the  regular 
process  of  production,  to  the  dismay  and  disadvantage  of  the  em- 
ployer. .  .  . 

Such  are  the  "direct"  methods  of  struggle  against  employers. 
But  the  revolutionary  syndicalists  have  another  enemy,  the  State, 
and  the  struggle  against  the  latter  is  another  aspect  of  "direct  ac- 
tion." 

The  State  appears  to  the  syndicalists  as  the  political  organiza- 
tion of  the  capitalist  class.  Whether  monarchist,  constitutional,  or 
republican,  it  is  one  in  character,  an  organization  whose  function  it 
is  to  uphold  and  to  protect  the  privileges  of  the  property  owners 
against  the  demands  of  the  working  class.  The  workingmen  are, 
therefore,  necessarily  forced  to  hurl  themselves  against  the  State  in 
their  efforts  toward  emancipation,  and  they  cannot  succeed  until 
they  have  broken  the  power  of  the  State. 

The  struggle  against  the  State,  like  the  struggle  against  the  em- 
ployers, must  be  carried  on  directly  by  the  workingmen  themselves. 
This  excludes  the  participation  of  the  syndicats  in  politics,  and  in 
electoral  campaigning.  The  parliamentary  system  is  a  system  of 
representation  opposed  in  principle  to  "direct  action"  and  serves 
the  interests  of  the  bourgeoisie,  for  the  management  of  which  it  is 
particularly  suited.  The  workingmen,  on  the  contrary,  can  derive 
no  benefit  from  it.  The  parliamentary  system  breeds  petty,  self- 
seeking  politicians,  corrupts  the  better  elements  that  enter  into  it 
and  is  a  source  of  intrig^ies  and  of  "wire-pulling."     The  so-called 


268     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

representatives  of  the  workingmen  do  not  and  cannot  avoid  the 
contagious  influence  of  parliament.  Their  policy  degenerates  into 
bargaining,  compromising,  and  collaboration  with  the  bourgeois  po- 
litical parties  and  weakens  the  class-struggle. 

The  syndicats,  therefore,  if  not  hostile,  must  remain  at  least 
indifferent  to  parliamentary  methods  and  independent  of  political 
parties.  They  must,  however,  untiringly  pursue  their  direct  strug- 
gle against  the  State.  The  direct  method  of  forcing  the  State  to 
yield  to  the  demands  of  the  workingmen  consists  in  exerting  ex- 
ternal pressure  on  the  public  authorities.  Agitation  in  the  press, 
public  meetings,  manifestations,  demonstrations  and  the  like,  are 
the  only  effective  means  of  making  the  government  reckon  with  the 
will  of  the  working  class. 

By  direct  pressure  on  the  government  the  workingmen  may  ob- 
tain reforms  of  immediate  value  to  themselves.  Only  such  re- 
forms, gained  and  upheld  by  force,  are  real.  All  other  reforms  are 
but  a  dead  letter  and  a  means  of  deceiving  the  workingmen. 

The  democratic  State  talks  much  about  social  reforms,  labor 
legislation  and  the  like.  In  fact,  however,  all  labor  laws  that  are 
of  real  importance  have  been  passed  only  under  the  pressure  of  the 
workingmen.  Those  which  owe  their  existence  to  democratic  legis- 
lators alone  are  devised  to  weaken  the  revolutionary  strength  of  the 
working  class.  Among  such  laws  are  those  on  conciliation  and  ar- 
bitration. All  democratic  governments  are  anxious  to  have  Boards 
of  Conciliation  and  of  Arbitration,  in  order  to  check  strikes  which 
are  the  main  force  of  the  working  class.  Workingmen  must  be  op- 
posed to  these  reforms,  which  are  intended  to  further  the  harmony 
and  collaboration  of  classes,  because  the  ideology  of  class-harmony 
is  one  of  the  most  dangerous  snares  which  are  set  for  the  working- 
men  in  a  democratic  State.*  This  ideology  blinds  the  workingmen 
to  the  real  facts  of  inequality  and  of  class-distinctions  which  are 
the  very  foundations  of  existing  society.  It  allures  them  into  hopes 
which  cannot  be  fuliilled  and  leads  them  astray  from  the  only  path 
of  emancipation  which  is  the  struggle  of  classes. 

Another  idea  which  is  used  by  the  democratic  State  for  the 
same  purpose  is  the  idea  of  patriotism.  '-'Our  country,"  "our  na- 
tion," are  mottoes  inculcated  into  the  mind  of  the  workingman 
from  his  very  childhood.  But  these  words  have  no  meaning  for 
the  workingman.  The  workingman 's  country  is  where  he  finds 
work.  In  search  of  work  he  leaves  his  native  land  and  wanders 
from  place  to  place.  He  has  no  fatherland  (patrie)  in  any  real 
meaning  of  the  term.     Ties  of  tradition,  of  a  common  intellectual 

*The    fundamental    principle    of    democracy    is    that    all    citizens    are 
equal  before  the  law  and  that  there  are  no  classes  in  the  state. 


PROPOSED  PLANS  OF  ACTION  269 

and  moral  heritage  do  not  exist  for  him.  In  his  experience  as 
workingman  he  finds  that  there  is  but  one  real  tie,  the  tie  of  eco- 
nomic interest  which  binds  him  to  all  the  workingmen  of  the  world, 
and  separates  him  at  the  same  time  from  all  the  capitalists  of  the 
world.  The  international  solidarity  of  the  workingmen  and  their 
anti-patriotism  are,  therefore,  necessary  consequences  of  the  class 
struggle. 

The  democratic  State,  like  any  other  State,  does  not  rely  upon 
ideological  methods  alone  in  keeping  down  the  workingmen.  It  has 
recourse  to  brute  force  as  well.  The  judiciary,  the  administrative 
machinery,  and  especially  the  army,  are  used  as  means  of  defeating 
the  movements  of  the  working  class.  The  army  is  particularly  ef- 
fective as  a  means  of  breaking  strikes,  of  crushing  the  spirit  of 
independence  in  the  workingmen,  and  as  a  means  of  keeping  up 
the  spirit  of  militarism.  An  anti-militaristic  propaganda  is  there- 
fore one  of  the  most  important  forms  of  struggle  against  the  State, 
as  well  as  against  capitalism. 

Anti-militarism  consists  in  carrying  on  in  the  army  a  propa- 
ganda of  syndicalist  ideas.  The  soldiers  are  reminded  that  they 
are  workingmen  in  uniforms,  who  will  one  day  return  to  their  homes 
and  shops,  and  who  should  not,  therefore,  forget  the  solidarity  which 
binds  them  to  their  fellow  workingmen  in  blouses.  The  soldiers  are 
called  upon  not  to  use  their  arms  in  strikes,  and  in  case  of  a  declara- 
tion of  war  to  refuse  to  take  up  arms.  The  syndicalists  threaten 
in  case  of  war  to  declare  a  general  strike.  They  are  ardent  apostles 
of  international  peace  which  is  indispensable,  in  their  opinion,  to 
the  success  of  their  movement. 

By  "direct  action"  against  employers  and  the  State  the  work- 
ingmen may  wrest  from  the  ruling  classes  reforms  which  may  im- 
prove their  condition  more  or  less.  Such  reforms  cannot  pacify  the 
working  class,  because  they  do  not  alter  the  fundamental  conditions 
of  the  wage  system,  but  they  are  conducive  to  the  fortification  of 
the  working  class  and  to  its  preparation  for  the  final  struggle. 
Every  successful  strike,  every  effective  boycott,  every  manifesta- 
tion of  the  workingmen's  will  and  power  is  one  more  blow  directed 
against  the  existing  order;  every  gain  in  wages,  every  shortening  of 
hours  of  work,  every  improvement  in  the  general  conditions  of  em- 
ployment is  one  more  position  of  importance  occupied  on  the 
march  to  the  decisive  battle,  the  general  strike,  which  will  be  the 
final  act  of  emancipation. 

The  general  strike — the  supreme  act  of  the  class  war — will  abol- 
ish the  classes  and  will  establish  new  forms  of  society.  The  general 
strike  must  not  be  regarded  as  a  deus  ex  machina  which  will  sud- 
denly appear  to  solve  all  difficulties,  but  as  the  logical  outcome  of 


272      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

jrom  without.  The  legislative  assemblies  of  the  present  State  de- 
cide upon  questions  that  are  entirely  foreign  to  them,  with  which 
they  have  no  real  connection  in  life  and  which  they,  therefore,  do 
not  understand.  The  rules  they  prescribe,  the  discipline  they  im- 
pose, come  as  an  external  agency  to  intervene  in  the  processes  of 
social  life.  The  State  is,  therefore,  arbitrary  and  oppressive  in  its 
very  nature. 

To  this  State-action  the  syndicalists  oppose  a  discipline  coming 
jrom  within,  a  rule  suggested  by  the  processes  of  collective  life  it- 
self, and  imposed  by  those  whose  function  it  is  to  carry  on  those 
processes.  It  is,  as  it  were,  a  specialization  of  function  carried  over 
into  the  domain  of  public  life  and  made  dependent  upon  industrial 
specialization.  No  one  should  legislate  on  matters  unless  he  has 
the  necessary  training.  The  syndicats,  the  delegates  of  the  syndi- 
cats  to  the  Bourses  du  Travail,  and  so  on,  only  they  can  properly 
deal  with  their  respective  problems.  The  rules  they  would  impose 
would  follow  from  a  knowledge  of  the  conditions  of  their  social 
functions  and  would  be,  so  to  speak,  a  "natural"  discipline  made 
inevitable  by  the  conditions  themselves.  Besides,  many  of  the 
functions  of  the  existing  State  w^ould  be  abolished  as  unnecessary 
in  a  society  based  on  common  ownership,  on  cooperative  work,  and 
on  collective  solidarity.  The  necessary  functions  of  local  adminis- 
tration would  be  carried  on  by  the  Bourses  du  Travail. 

In  recent  years,  however,  revolutionary  syndicalists  have  not 
expatiated  upon  the  forms  of  the  future  society.  Convinced  that 
the  social  transformation  is  inevitable,  they  have  not  thought  it 
necessary  to  have  any  ready-made  model  upon  the  lines  of  which 
the  social  organization  of  the  future  should  be  carved.  The  revolu- 
tionary classes  of  the  past  had  no  idea  of  the  new  social  system 
they  were  struggling  for,  and  no  ready-made  plan  is  necessary  for 
the  working-class.  Prepared  by  all  the  preliminary  struggle,  the 
workingmen  will  find  in  themselves,  when  the  time  comes,  sufficient 
creative  power  to  remake  society.  The  lines  of  the  future,  how- 
ever, are  indicated  in  a  general  way  by  the  development  of  the  pres- 
ent, and  the  syndicalist  movement  is  clearly  paving  the  way  for  an 
"economic  federalism." 

The  workingmen  are  being  prepared  for  their  future  role  by 
the  experiences  of  syndicalist  life.  The  very  struggle  which  the 
syndicats  carry  on  train  the  workingmen  in  solidarity,  in  voluntary 
discipline,  in  power  and  in  determination  to  resist  oppression,  and 
in  other  moral  qualities  which  group  life  requires.  Moreover,  the 
syndicats,  particularly  the  Bourses  du  Travail,  are  centers  where 
educational  activities  are  carried  on.  Related  to  the  facts  of  life 
'and  to  the  concrete  problems  of  the  day,  this  educational  work,  in 


PROPOSED  PLANS  OF  ACTION  273 

the  form  of  regular  courses,  lectures,  readings,  etc.,  is  devised  to 
develop  the  intellectual  capacities  of  the  workingmen. 

The  struggle  of  the  present  and  the  combat  of  the  future  imply 
the  initiative,  the  example  and  the  leadership  of  a  conscious  and 
energetic  minority  ardently  devoted  to  the  interests  of  its  class. 
The  experience  of  the  labor  movement  has  proven  this  beyond  all 
doubt.  The  mass  of  workingmen,  like  every  large  mass,  is  inert. 
It  needs  an  impelling  force  to  set  it  into  motion  and  to  put  to  work 
its  tremendous  potential  energy.  Every  strike,  every  labor  demon- 
stration, every  movement  of  the  working  class  is  generally  started 
by  an  active  and  daring  minority  which  voices  the  sentiments  of 
the  class  to  which  it  belongs. 

The  conscious  minority,  however,  can  act  only  by  carrying  with 
it  the  mass,  and  by  making  the  latter  participate  directly  in  the 
struggle.  The  action  of  the  conscious  minority  is,  therefore,  just  the 
opposite  of  the  action  of  parliamentary  representatives.  The  latter 
are  bent  on  doing  everything  themselves,  on  controlling  absolutely 
the  affairs  of  the  country;  they  are  anxious,  therefore,  to  keep  the 
masses  as  quiet,  as  inactive  and  as  submissive  as  possible.  The 
conscious  minority,  on  the  contrary,  is  simply  the  advance  guard 
of  its  class;  it  cannot  succeed,  unless  backed  by  the  solid  forces  of 
the  masses;  the  awareness,  the  readiness  and  the  energy  of  the  lat- 
ter are  indispensable  conditions  of  success  and  must  be  kept  up  by 
all  means. 

The  idea  of  the  "conscious  minority"  is  opposed  to  the  demo- 
cratic principle.  Democracy  is  based  upon  majority  rule,  and  its 
method  of  determining  the  general  will  is  universal  suffrage.  But 
experience  has  shown  that  the  "general  will"  is  a  fiction  and  that 
majority  rule  really  becomes  the  domination  of  a  minority — which 
can  impose  itself  upon  all  and  exploit  the  majority  in  its  own  in- 
terests. This  is  inevitably  so,  because  universal  suffrage  is  a 
clumsy,  mechanical  device  which  brings  together  a  number  of  dis- 
connected units  and  makes  them  act  without  proper  understanding 
of  the  thing  they  are  about.  The  effect  of  political  majorities  when 
they  do  make  themselves  felt  is  to  hinder  advance  and  to  suppress 
the  progressive,  active  and  more  developed  minorities. 

The  practice  of  the  labor  movement  is  necessarily  the  reverse  of 
this.  The  syndicats  do  not  arise  out  of  universal  suffrage  and  are 
not  the  representatives  of  the  majority  in  the  democratic  sense  of 
the  term.  They  group  but  a  minority  of  all  workingmen  and  can 
hardly  expect  ever  to  embrace  the  totality  or  even  the  majority  of 
the  latter. 

The  syndicats  arise  through  a  process  of  selection.  The  more 
sensitive,  the  intellectually  more  able,  the  more  active  workingmen 


2  72      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

jrom  without.  The  legislative  assemblies  of  the  present  State  de- 
cide upon  questions  that  are  entirely  foreign  to  them,  with  which 
they  have  no  real  connection  in  life  and  which  they,  therefore,  do 
not  understand.  The  rules  they  prescribe,  the  discipline  they  im- 
pose, come  as  an  external  agency  to  intervene  in  the  processes  of 
social  life.  The  State  is,  therefore,  arbitrary  and  oppressive  in  its 
very  nature. 

To  this  State-action  the  syndicalists  oppose  a  discipline  coming 
jrom  within,  a  rule  suggested  by  the  processes  of  collective  life  it- 
self, and  imposed  by  those  whose  function  it  is  to  carry  on  those 
processes.  It  is,  as  it  were,  a  specialization  of  function  carried  over 
into  the  domain  of  public  life  and  made  dependent  upon  industrial 
specialization.  No  one  should  legislate  on  matters  unless  he  has 
the  necessary  training.  The  syndicats,  the  delegates  of  the  syndi- 
cats  to  the  Bourses  du  Travail,  and  so  on,  only  they  can  properly 
deal  with  their  respective  problems.  The  rules  they  would  impose 
would  follow  from  a  knowledge  of  the  conditions  of  their  social 
functions  and  would  be,  so  to  speak,  a  "natural"  discipline  made 
inevitable  by  the  conditions  themselves.  Besides,  many  of  the 
functions  of  the  existing  State  would  be  abolished  as  unnecessary 
in  a  society  based  on  common  ownership,  on  cooperative  work,  and 
on  collective  solidarity.  The  necessary  functions  of  local  adminis- 
tration would  be  carried  on  by  the  Bourses  du  Travail. 

In  recent  years,  however,  revolutionary  syndicalists  have  not 
expatiated  upon  the  forms  of  the  future  society.  Convinced  that 
the  social  transformation  is  inevitable,  they  have  not  thought  it 
necessary  to  have  any  ready-made  model  upon  the  lines  of  which 
the  social  organization  of  the  future  should  be  carved.  The  revolu- 
tionary classes  of  the  past  had  no  idea  of  the  new  social  system 
they  were  struggling  for,  and  no  ready-made  plan  is  necessary  for 
the  working-class.  Prepared  by  all  the  preliminary  struggle,  the 
workingmen  will  find  in  themselves,  when  the  time  comes,  sufficient 
creative  power  to  remake  society.  The  lines  of  the  future,  how- 
ever, are  indicated  in  a  general  way  by  the  development  of  the  pres- 
ent, and  the  syndicalist  movement  is  clearly  paving  the  way  for  an 
"economic  federalism." 

The  workingmen  are  being  prepared  for  their  future  role  by 
the  experiences  of  syndicalist  life.  The  very  struggle  which  the 
syndicats  carry  on  train  the  workingmen  in  solidarity,  in  voluntary 
discipline,  in  power  and  in  determination  to  resist  oppression,  and 
in  other  moral  qualities  which  group  life  requires.  Moreover,  the 
syndicats,  particularly  the  Bourses  du  Travail,  are  centers  where 
educational  activities  are  carried  on.  Related  to  the  facts  of  life 
and  to  the  concrete  problems  of  the  day,  this  educational  work,  in 


PROPOSED  PLANS  OF  ACTION  273 

the  form  of  regular  courses,  lectures,  readings,  etc.,  is  devised  to 
develop  the  intellectual  capacities  of  the  workingmen. 

The  struggle  of  the  present  and  the  combat  of  the  future  imply 
the  initiative,  the  example  and  the  leadership  of  a  conscious  and 
eiiergetic  minority  ardently  devoted  to  the  interests  of  its  class. 
The  experience  of  the  labor  movement  has  proven  this  beyond  all 
doubt.  The  mass  of  workingmen,  like  every  large  mass,  is  inert. 
It  needs  an  impelling  force  to  set  it  into  motion  and  to  put  to  work 
its  tremendous  potential  energy.  Every  strike,  every  labor  demon- 
stration, every  movement  of  the  working  class  is  generally  started 
by  an  active  and  daring  minority  which  voices  the  sentiments  of 
the  class  to  which  it  belongs. 

The  conscious  minority,  however,  can  act  only  by  carrying  with 
it  the  mass,  and  by  making  the  latter  participate  directly  in  the 
struggle.  The  action  of  the  conscious  minority  is,  therefore,  just  the 
opposite  of  the  action  of  parliamentary  representatives.  The  latter 
are  bent  on  doing  everything  themselves,  on  controlling  absolutely 
the  affairs  of  the  country;  they  are  anxious,  therefore,  to  keep  the 
masses  as  quiet,  as  inactive  and  as  submissive  as  possible.  The 
conscious  minority,  on  the  contrary,  is  simply  the  advance  guard 
of  its  class;  it  cannot  succeed,  unless  backed  by  the  solid  forces  of 
the  masses;  the  awareness,  the  readiness  and  the  energy  of  the  lat- 
ter are  indispensable  conditions  of  success  and  must  be  kept  up  by 
all  means. 

The  idea  of  the  "conscious  minority"  is  opposed  to  the  demo- 
cratic principle.  Democracy  is  based  upon  majority  rule,  and  its 
method  of  determining  the  general  will  is  universal  suffrage.  But 
experience  has  shown  that  the  "general  will"  is  a  fiction  and  that 
majority  rule  really  becomes  the  domination  of  a  minority — which 
can  impose  itself  upon  all  and  exploit  the  majority  in  its  own  in- 
terests. This  is  inevitably  so,  because  universal  suffrage  is  a 
clumsy,  mechanical  device  which  brings  together  a  number  of  dis- 
connected units  and  makes  them  act  without  proper  understanding 
of  the  thing  they  are  about.  The  effect  of  political  majorities  when 
they  do  make  themselves  felt  is  to  hinder  advance  and  to  suppress 
the  progressive,  active  and  more  developed  minorities. 

The  practice  of  the  labor  movement  is  necessarily  the  reverse  of 
this.  The  syndicats  do  not  arise  out  of  universal  suffrage  and  are 
not  the  representatives  of  the  majority  in  the  democratic  sense  of 
the  term.  They  group  but  a  minority  of  all  workingmen  and  can 
hardly  expect  ever  to  embrace  the  totality  or  even  the  majority  of 
the  latter. 

The  syndicats  arise  through  a  process  of  selection.  The  more 
sensitive,  the  intellectually  more  able,  the  more  active  workingmen 


2  74     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

come  together  and  constitute  themselves  a  syndicat.  They  begin  to 
discuss  the  affairs  of  their  trade.  When  determined  to  obtain  its 
demands,  the  syndicat  enters  into  a  struggle,  without  at  first  finding 
out  the  ''general  will."  It  assumes  leadership  and  expects  to  be 
followed,  because  it  is  convinced  that  it  expresses  the  feelings  of 
all.     The  syndicat  constitutes  the  leading  conscious  minority. 

The  syndicat  obtains  better  conditions  not  for  its  members  alone, 
but  for  all  the  members  of  the  trade  and  often  for  all  the  working- 
men  of  a  locality  or  of  the  country.  This  justifies  its  self-assumed 
leadership,  because  it  is  not  struggling  for  selfish  ends,  but  for  the 
interests  of  all.  Besides,  the  syndicat  is  not  a  medieval  guild  and 
is  open  to  all.  If  the  general  mass  of  workingmen  do  not  enter 
the  syndicats,  they  themselves  renounce  the  right  of  determining 
conditions  for  the  latter.  Benefiting  by  the  struggles  of  the  minor- 
ity, they  cannot  but  submit  to  its  initiative  and  leadership. 

The  syndicat,  therefore,  is  not  to  be  compared  with  "cliques," 
"rings,"  "political  machines,"  and  the  like.  The  syndicat,  it  must 
be  remembered,  is  a  group  of  individuals  belonging  to  the  same 
trade.  By  this  very  economic  situation  the  members  of  a  syndicat 
are  bound  by  ties  of  common  interest  with  the  rest  of  their  fellow- 
workingmen.  A  sense  of  solidarity  and  an  altruistic  feeling  of  de- 
votion to  community  interests  must  necessarily  arise  in  the  syndi- 
cat which  is  placed  in  the  front  ranks  of  the  struggling  workingmen. 
The  leadership  of  the  syndicalist  minority,  therefore,  is  necessarily 
disinterested  and  beneficent  and  is  followed  voluntarily  by  the 
workingmen. 

Thus,  grouping  the  active  and  conscious  minority,  the  syndicats 
lead  the  workingmen  as  a  class  in  the  struggle  for  final  emancipation. 
Gradually  undermining  the  foundations  of  existing  society,  they 
are  developing  within  the  framework  of  the  old  the  elements  of  a 
new  society,  and  when  this  process  shall  have  sufficiently  advanced, 
the  workingmen  rising  in  the  general  strike  will  sweep  away  the 
undermined  edifice  and  erect  the  new  society  born  from  their  own 
midst 

What  is  the  future  that  may  be  predicted  for  the  General  Con- 
federation of  Labor?  Will  the  synthesis  of  revolutionism  and  of 
unionism  that  has  been  achieved  in  it  continue  more  or  less  stable 
until  the  "final"  triumph  of  the  revolutionary  syndicalists?  Or 
will  the  latter  be  overpowered  by  the  "reformist"  elements  who  will 
impress  their  ideas  on  the  Confederation  and  who  will  change  the 
character  of  French  syndicalism? 

These  questions  cannot  at  present  be  answered.  The  movement 
is  so  young  that  no  clear  tendencies  either  way  can  be  discerned. 
The  two  possibilities,  however,  may  be  considered  in  connection  with 


PROPOSED  PLANS  OF  ACTION  275 

the  conditions  that  would  be  required  to  transform  them  into 
realities. 

Those  who  predict  a  change  in  the  character  of  French  syndi- 
calism generally  have  the  history  of  English  Trades  Unionism  in 
mind.  They  compare  revolutionary  syndicalism  to  the  revolution- 
ary period  of  English  Trades  Unionism  and  think  of  the  change 
that  came  about  in  the  latter  in  the  third  quarter  of  the  past  cen- 
tury. But  the  comparison  is  of  little  value,  because  the  conditions 
of  France  are  different  from  those  of  England,  and  because  the  in- 
ternational economic  situation  to-day  is  very  different  from  what  it 
was  fifty  years  ago. 

It  is  probable  that  if  the  French  syndicats  should  develop  into 
large  and  strong  unions,  highly  centralized  and  provided  with  large 
treasuries,  other  ideas  and  methods  would  prevail  in  the  syndicalist 
movement.  But  this  change  is  dependent  on  a  change  in  the  eco- 
nomic life  of  France.  France  must  cease  to  be  "the  banker  of  Eu- 
rope," must  cease  to  let  other  countries  use  its  piled-up  millions  for 
the  development  of  their  natural  resources  and  industry,  and  must 
devote  itself  to  the  intensification  of  its  own  industrial  activities. 
Such  a  change  could  bring  about  greater  productivity,  higher  wages, 
and  a  higher  concentration  of  the  workingmen  of  the  country.  This 
change  in  conditions  of  life  might  result  in  a  modification  of  the 
psychology  of  the  French  workingmen,  though  how  rapid  and  how 
thorough-going  such  a  process  could  be  is  a  matter  of  conjecture. 
But  whether  France  will  or  can  follow  the  example  of  England 
or  of  Germany,  in  view  of  its  natural  resources  and  of  the  situation 
of  the  international  market,  it  does  not  seem  possible  to  say.  Be- 
sides, to  change  completely  the  character  of  French  syndicalism,  it 
would  be  necessary  to  wipe  out  the  political  history  of  France  and 
its  revolutionary  traditions. 

On  the  other  hand,  the  triumph  of  the  revolutionary  syndicalists 
presupposes  a  total  readjustment  of  groups  and  of  interests.  The 
Confederation  counts  now  about  600,000  members.  Official  statistics 
count  over  1,000,000  organized  workingmen  in  France.  But  it  must 
be  remembered  that  the  federations  underestimate  their  numbers 
for  the  Confederation  in  order  to  pay  less,  while  they  exaggerate 
their  numbers  for  the  Annuaire  Statistique  in  order  to  appear  more 
formidable.  The  Confederation,  besides,  for  various  reasons  rejects 
a  number  of  organizations  which  desire  to  join  it.  It  may  be  safe 
to  say,  therefore,  that  the  Confederation  brings  under  its  influence 
the  greater  part  of  the  organized  workingmen  of  France. 

But  the  total  number  of  workingmen  in  France,  according  to 
the  Census  of  1906,  is  about  10,000,000,  of  which  about  5,000,000 
are  employed  in  industry  and  in  transportation.     The  numbers  of 


2  76      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

independent  producers  in  industry,  commerce,  and  agriculture  is 
about  9,000,000,  of  which  about  2,000,000  are  petits  patrons.  Over 
a  million  and  a  half  persons  are  engaged  in  the  liberal  professions 
and  in  the  public  services. 

Among  the  latter  the  revolutionary  syndicalists  have  met  with 
success  in  recent  years.  The  ideas  of  revolutionary  syndicalism  have 
gained  adherents  among  the  employees  of  the  post  office,  telegraph 
and  telephone,  and  among  the  teachers  of  the  public  schools.  The 
recent  Congress  of  the  teachers  have  declared  themselves  ready  to 
collaborate  with  the  workingmen  for  the  realization  of  their  ideal 
society.  The  following  motion  adopted  by  the  recent  Congress  of 
Nantes,  at  which  500  delegates  were  present,  is  very  characteristic 
"The  professional  associations  of  teachers  (men  and  women),  em- 
ployees of  the  State,  of  the  Departments  and  of  the  Communes," 
reads  the  motion,  "assembled  in  the  Bourse  du  Travail,  declare  their 
sympathy  for  the  working  class,  declare  that  the  best  form  of  pro- 
fessional action  is  the  syndical  form;  express  their  will  to  work 
together  with  the  workingmen's  organizations  for  the  realization 
of  the  Social  Republic." 

Also  among  the  industrial  and  commercial  middle  classes  there 
are  some  who  look  with  favor  on  syndicalism.  The  French  middle 
classes  have  for  the  last  quarter-  of  a  century  tried  to  organize 
themselves  for  resistance  against  the  "financial  feudalism"  from 
which  they  suffer.  Several  organizations  have  been  formed  among 
the  small  merchants  and  masters,  and  in  1908  the  "Association  for 
the  Defense  of  the  Middle  Classes"  was  constituted.  The  president 
of  this  Association,  M.  Colrat,  wrote:  "The  ideas  of  the  bourgeois 
syndicalism  on  the  future  are  the  same  as  those  of  the  workingmen's 
syndicalism,  .  .  .  Far  from  contradicting  one  another,  the  syn- 
dicalism of  the  middle  classes  and  the  syndicalism  of  the  working 
classes  reinforce  each  other  in  many  respects,  and  notwithstanding 
many  vexations,  they  lead  to  a  state  of  relative  equilibrium  by  a 
certain  equality  of  opposing  forces."  In  the  struggle  against  the  big 
capitalists  the  leaders  of  the  middle  classes  appear  to  be  ready 
to  form  an  alliance  with  the  working-class.  There  can  be  little 
doubt,  however,  that  the  middle  classes  in  general  are  opposed  to  the 
revolutionary  ideals  of  the  syndicalists.  To  succeed,  the  revolution 
ary  syndicalists  must  bring  about  a  change  in  the  attitude  of  these 
classes,  for  the  history  of  France  has  shown  that  the  fear  of  "Com- 
munism" may  throw  the  middle  classes  into  the  arms  of  a  Caesar. 

Whatever  possibility  may  become  a  reality,  France  seems  des- 
tined to  go  through  a  series  of  more  or  less  serious  struggles.  Ham- 
pered by  the  elements  which  hark  back  to  the  past  and  which  have 
not  yet  lost  all  importance,  disorganized  by  the  revolutionists  who 


PROPOSED  PLANS  OF  ACTION  277 

look  forward  to  the  future  for  the  realization  of  their  ideal,  the 
Republic  of  France  is  still  lacking  the  stability  which  could  save 
her  from  upheavals  and  from  historical  surprises.  The  highly  cen- 
tralized form  of  government  and  the  dominating  position  which 
Paris  still  holds  in  the  life  of  France  make  such  surprises  easier  and 
more  tempting  than  would  otherwise  be  the  case.  The  process  of 
social  readjustment  which  is  going  on  all  over  the  world  at  present, 
therefore,  must  lead  in  France  to  a  more  or  less  catastrophic  col- 
lision of  the  discordant  elements  which  her  political  and  economic 
history  have  brought  into  existence. 

The  struggle  has  already  begun.  The  government  of  the  Re- 
public is  determined  to  put  an  end  to  the  revolutionary  activities  of 
the  syndicalists.  It  is  urged  on  by  all  those  who  believe  that  only 
the  weakness  of  the  Government  has  been  the  cause  of  the  strength 
of  the  Syndicalists.  On  the  other  hand,  the  Syndicalists  are  de- 
termined to  fight  their  battle  to  the  end.  What  the  outcome  may 
be  is  hidden  in  the  mystery  of  the  future.    Qui  vivra — vcrra. 

J.  G.  Brooks:  American  Syndicalism  and  the  I.W.W.* 

(pp.  72-92) 

Like  the  sound  of  a  bell  in  the  night,  the  Industrial  Workers  of 
the  World  strike  an  alarm  note  that  seems  as  new  and  strange 
to  us  as  if  some  unknown  enemy  were  at  the  gate.  Both  the  purpose 
and  the  weapons  used  are  alien  and  uncanny  to  our  thought.  We 
are  just  becoming  half  wonted  to  Socialism,  but  the  defiant,  riotous 
ways  of  this  American  Syndicalism  are  past  understanding.  For  its 
field  of  action  it  selects  most  unexpected  points;  hotels  and  restau- 
rants with  petrifying  hints  that  concern  the  stomach  of  the  public; 
then  the  camp  of  lumberjacks,  north  and  south;  small,  self-confident 
cities  on  the  Pacific  coast.  West  Virginia  mines,  Pittsburgh  indus- 
tries and  New  England  textile  cities,  hitherto  proud  of  their  orderly 
records.  More  disconcerting  still  is  its  attack  on  Socialism,  as  we 
have  known  it.  This  is  beset  by  the  newcomers  with  as  much 
acrimony  as  capitalism  itself.  A  prolific  I.  W.  W.  literature  has 
more  acrid  abuse  of  the  many  prominent  socialist  leaders  than  any- 
thing appearing  in  capitalistic  sheets. 

Tit  for  tat,  against  the  I.  W.  W.  and  its  prevailing  tactics, 
socialist  authorities  the  world  over  are  writing  by  far  the  most 
scathing  and  contemptuous  criticism.    .    .    . 

That  Europe  will  free  herself  so  easily  from  the  "child's  disease" 
is  open  to  question  but  we  in  this  country  shall  not  escape  its  dis- 
cipline.   The  very  spirit  with  which  we  fight  it  will,  for  a  long  time, 

*  Copyright,  The  Macmillan  Company'.   Reprinted  by  permission. 


278     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

help  it.  We  have  already  added  immeasurably  to  its  strength  by 
the  use  of  tactics  as  little  defensible  as  the  practice  of  the  I.  W.  W. 
itself.  For  the  gravity  of  the  movement  in  this  country,  I  shall  not 
offer  general  or  theoretical  proofs.  ...  In  1903,  I  was  asked  by 
the  late  Commissioner  of  Labor  Carroll  D.  Wright,  to  report  to  him 
confidentially  upon  the  strike  in  Colorado  of  the  Western  Federa- 
tion of  Miners, 

In  the  murky  terrors  of  that  miners'  strike,  the  vehement  and 
practical  thing  called  I.  W.  W.  had  its  birth.  Grimy  and  hot,  it 
rose  there  as  from  a  sulphurous  pit.  It  is  insufficient  testimony, 
but  one  of  the  more  daring  leaders  in  that  strike  assured  me  that 
not  one  of  them  ever  heard  of  "Syndicalism"  as  for  ten  years  it 
had  been  known  in  Europe.  He  said:  "One  or  two  of  us  knew 
that  trade  unions  were  called  Syndicates  in  France,  and  that 
sabotage  meant  some  sort  of  a  row  with  the  boss,  in  which  labor 
got  back  at  him  with  new  tricks.  It  enabled  the  men  to  hold 
onto  their  jobs  while  the  strike  was  still  carried  on  at  the  point 
of  production."  Here  they  could  quietly  bring  worse  damage  to 
the  employer.  The  same  informant  has  since  assured  me  "the 
I.  W.  W.  was  hammered  out  in  the  fires  of  that  conflict."  So  far 
as  origins  have  value,  the  source  of  the  Western  Federation  of 
Miners  and  its  stormy  history  must  have  brief  notice.  The  most 
rugged  personality  it  has  produced  is  that  of  William  D.  Hay- 
wood, who  was  amused  that  any  one  should  think  the  mild  dis- 
turbance at  Lawrence,  jNIass.,  really  serious.  It  was  at  most  like  a 
scrimmage  among  ladies.  But  Colorado,  he  said,  "was  the  real 
thing,  that  was  a  man's  fight."  Amidst  the  wranglings  at  Law- 
rence, a  citizen  cried  out,  "What  have  we  done  that  a  pack  of 
ignorant  foreigners  should  hold  us  by  the  throat?" 

The  first  fact  in  the  "man's  fight"  from  Coeur  d'Alene  in  1894  to 
Cripple  Creek  in  1903-4  is  that  "foreigners"  neither  led  it  nor  were 
very  conspicuous  in  it.  It  was  as  "American"  as  the  Republican 
Party.  This  "Western  Federation"  began  in  Butte,  Montana,  in 
the  spring  of  1893.   .    .    . 

These  unpleasant  notes  are  not  recorded  here  to  excuse  the 
succession  of  inhuman  savageries  of  which  some  members  of  the 
Western  Federation  of  Miners  were  plainly  guilty.  On  both  sides 
there  were  years  of  frontier  warfare  with  every  characteristic  of 
war  except  its  public  and  official  sanction.  It  is  a  story  that  reads 
like  the  vandalisms  connected  with  our  early  "Whiskey  Rebellion" 
as  recorded  in  McMaster's  second  volume  of  his  history. 

The  men  owning  large  mining  properties  and  transportation 
systems  in  those  regions  did  not  propose  to  have  groups  of  socialistic 
trade  unions  endanger  these  values.     Millions  were  listed  on  the 


PROPOSED  PLANS  OF  ACTION  279 

stock  market  liable  to  tumble  if  investors  were  frightened  and  credit 
impaired.  Nothing  is  more  cruel  or  more  lawless  than  great  prop- 
erties if  thoroughly  intimidated.  In  the  midst  of  this  struggle  a 
lawyer,  fighting  for  these  interests,  said  openly,  "Law  or  no  law, 
we  will  not  have  a  lot  of  thugs  interfere  with  our  business." 

There  is  no  such  study  of  social  guilt  as  that  revealed  very 
generally  in  this  country  during  serious  strikes.  Police  duties  which 
belong  strictly  to  public  authorities  are  turned  over  to  owners  of 
private  property.  Thus  instantly  appear  upon  the  scene  detectives, 
spies,  and  imported  strike-breakers,  among  whom  (as  in  this  in- 
stance) are  lawless  and  desperate  characters.  Deliberately,  we  per- 
mit and  sanction  this  procedure,  certain  to  create  upon  the  spot 
every  condition  out  of  which  insane  hatreds  and  violence  are 
bred.  .  .  . 

It  is  the  essence  of  ''social  legislation  that  it  stands  for  the  public 
welfare  and  not  for  any  special  interest.  Piece  by  piece,  since  1802, 
in  England,  it  has  been  built  up.  It  has  tried  to  "regulate"  the  more 
lawless  forces  of  competing  private  interests,  as  well  as  the  health, 
housing,  hours,  and  conditions  of  labor,  the  child  in  industry,  oc- 
cupational diseases,  industrial  insurance,  and  then,  with  more  specific 
intent,  the  direct  curbing  of  corporate  powers  in  banks,  railways, 
insurance,  and  the  whole  extending  network  of  big  business  as  it 
becomes  national  in  its  affiliations.  It  is  generally  believed  that 
these  forces  have  been  restrained  to  the  common  good;  that  they 
cannot  as  of  old,  show  contempt  for  public  opinion,  even  if  they 
feel  it.  Large  sections  of  English,  German,  and  French  socialists 
agree  in  this,  that  legislative  reforms  have  already  produced  im- 
mense benefits,  and  that  the  way,  even  for  socialists,  is  along  this 
same  pathway  of  enlarged  and  more  coherent  amelioration. 

True  or  false  this  issue  cuts  to  the  marrow  of  our  question.  It 
presents  the  case  about  which  the  main  struggle  of  the  future  is 
to  turn.  Is  the  present  society  to  be  "reformed"  into  some  tolerable 
measure  of  justice  and  "equal  hope  for  all"?  Are  the  main  lines 
of  this  regeneration  already  traced,  with  such  clearness  that  we  have 
only  to  continue  as  we  have  begun?  Or,  are  we  to  confess  their 
futility  and  fall  to,  in  good  I.  W.  W.  fashion,  to  ridicule  charities, 
philanthropies,  social  settlements,  welfare  work,  sliding  scales,  arbi- 
tration and  the  full  score  of  other  attempts  to  unite  and  organize 
the  entire  good  will  of  society  and  not  merely  a  "class  conscious" 
part  of  it? 

But  Syndicalist  criticism  goes  much  further.  We  have  for  ex- 
ample taken  the  Post  Office  away  from  the  private  profit  maker  to 
manage  democratically  and  directly  for  public  uses.  Most  of  the 
world's  railroads  have  been  taken  by  the  state;    large  parts  of 


28o      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

trolley  lines,  gas,  telephone,  telegraph;  a  good  deal  of  private  insur- 
ance, mines,  and  water  powers,  together  with  a  long  list  of  munici- 
pal hotels,  restaurants,  milk  supplies;  all  these  have  already  been 
"socialized,"  "taken  over"  for  public  administration  "in  the  interests 
of  all."  These  are  for  the  most  part  imperfectly  managed,  but  their 
intent  is  socialistic,  because  they  lessen  the  area  of  private  invest- 
ment. Are  we  to  continue  in  this  direction  by  carrying  out  this 
same  process  to  its  supposed  logical  completeness?  When  it  is 
applied  to  banks,  land,  shipping,  mills,  mines  and  the  entire  body  of 
more  im,portant  industries,  shall  we  have  the  essentials  of  the  so- 
cialistic state? 

In  every  advanced  country,  this  is  the  express  claim  of  a  most 
influential  part  of  the  active  and  disciplined  leadership  among  So- 
cialists. At  the  points  where  they  secure  political  power  and  re- 
sponsibility, this  opinion  steadily  gains  in  influence.  This  view 
assumes  that  the  evils  of  capitalism  are  slowly  being  lessened,  and 
that  the  way  to  diminish  them  further  still,  is  to  extend  the  whole 
regulating  and  "socializing"  process  now  under  way. 

The  hot  protest  against  the  above  is  not  confined  to  the  I.  W.  W. 
Hosts  of  more  revolutionary  spirits  reject  these  "bourgeois  concilia- 
tions," but  none  reject  them  with  more  contemptuous  unanimity 
than  Syndicalists  in  general.  They  tell  us  that  our  prevailing  busi- 
ness system  never  was  more  triumphant  or  unrepentant.  Never  did 
it  strip  labor  closer  to  the  bone.  Never  did  it  lug  away  to  private 
vaults  so  large  a  share  of  that  wealth  wrung  from  the  sweat  and 
toil  of  those  who  labor.  From  its  inner  kingdom  of  finance,  its 
cunning  devices  of  "underwriting"  and  control  of  credit,  marketing 
securities,  over-capitalization,  and  such  like  juggleries,  the  powers 
of  capitalism  so  control  the  final  dividing  of  products  as  to  get 
absolutely  and  relatively  an  increasing  pillage  for  their  share.  In 
these  round  terms  of  condemnation  Syndicalists  speak  to  us  of  dis- 
credited social  and  economic  reform  alike.  It  has  no  more  funda- 
mental characteristic  than  this. 

Their  [I.  W.  \V.]  ablest  exponents  now  state  their  case  in  the 
International  Socialist  Revieiv.  In  the  last  issue  in  my  possession, 
a  writer  in  the  interest  of  "Simplicity"  puts  the  case  as  follows: 

"The  world's  people  belong  to  or  support  one  of  the  two  great 
classes,  capitalists  or  workers. 

"What  have  we  got?  Nothing.  What  have  they  got?  Every- 
thing. 

"Now  we  want  it.     Simple,  isn't  it? 

"We  demand  all  they've  got.  WTiy?  Because  they  have  stolen 
it  from  us.  We  are  the  disinherited  of  the  earth  and  we  are  getting 
ready  to  take  back  what  belongs  to  us. 


PROPOSED  PLANS  OF  ACTION  281 

"They  told  us  in  the  beginning  that  there  was  a  chance  for 
all.    Now  we  know  that  they  lied. 

"We  have  become  wise  to  the  fact  that  we  are  the  victims,  the 
suckers,  the  fallguys,  in  the  greatest  bunco  game  ever  invented.  We 
put  all  we  had  into  it — our  health,  our  hopes,  our  strength  and 
power  to  labor — but  everything  went  merely  to  make  them  richer 
and  stronger.  The  result  is  that  they  are  the  o-wmers  of  everything 
that  makes  life  worth  living. 

"We  want  it  back.     Now  how  are  we  going  to  get  it? 

"Ask  them  for  it?     They  would  hand  us  the  laugh? 

"Buy  it  from  them?  It  never  belonged  to  them  in  the  first 
place — no,  we  are  going  to  take  it. 

"Take  it  how?  By  force?  No,  not  necessaril3^  By  bullets?  We 
are  not  so  foolish.  We  have  the  power  already.  We  far  outnumber 
them  and  our  brains,  when  used,  are  as  good  as  theirs.  Therefore, 
we  will  organize  our  povrer  and  use  our  brains  in  our  own  behalf 
hereafter  instead  of  theirs,  ^^^len  the  workers  are  once  solidly 
united  the  system  by  which  the  capitalists  daily  rob  us  of  the  fruits 
of  our  toil  will  simply  fall  of  its  own  weight." 

But  until  ice  learn  a  new  solicitude  for  things  that  shame  us, 
this  sharp  surgery  of  revolt  is  to  be  welcomed. 

It  is  directly  to  a  threatening  and  rebuking  Socialism  that 
Europe  owes  much  of  its  most  effective  social  legislation.  It  literally 
scared  society  into  some  of  its  most  elementary  duties.  Until  we 
can  act  without  threats,  threats  are  our  salvation — yes,  even  the 
threats  of  the  I.  W.  W.  This  service  they  render,  and  it  is  not  a 
mean  one.  They  are  telling  plain  truths  to  many  sections  of  our 
community.  They  are  challenging  some  of  our  old  trade  unions, — 
telling  them  of  their  lust  for  monopoly  power;  of  their  tendency  to 
exclusiveness  and  snobbery  toward  the  unskilled  and  less  fortunate 
among  the  laborers.  A  trade  union  like  some  in  the  glass  industry 
may  develop  every  monopoly  vice  that  capitalism  shows  at  its 
worst.  It  may  have  the  same  hard  complacency,  the  same  indiffer- 
ence, the  same  need  to  be  convicted  of  sin  that  is  socially  true  of 
us  all.  I  asked  one  of  the  oldest  and  best  of  our  social  settlement 
workers  what,  in  order  of  demerit,  was  our  chief  sin.  She  said: 
"The  sleep  of  indifference  among  the  comfortable,  headed  the  list." 

The  rebelling  spirit  of  the  I.  W.  W.  is  at  least  a  wholesome  dis- 
quieter  of  this  sleep.  If  we  add  to  this,  its  own  awakening  appeal 
to  the  more  unfavored  labor  in  which  its  propaganda  is  carried  on, 
we  are  merely  recognizing  forces  that  are  useful  until  a  wiser  way 
is  found  to  do  their  work.  This  we  have  not  yet  found,  neither 
have  we  greatly  and  searchingly  tried  to  find  it.    So  many  are  cur 


282      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

social  inhumanities  that  the  rudest  upsetting  will  do  us  good  if  the 
shock  of  it  forces  us  to  our  duties. 

With  much  of  the  purposes,  motive,  of  the  I.  W.  W.  we  may 
also  sympathize.  The  goal  at  which  they  aim  is  one  from  which 
every  parasitic  and  unfair  privilege  shall  be  cut  out.  I  asked  one  of 
the  best  of  them,  "What  ultimately  do  you  want"?  "I  want  a 
world,"  he  said,  "in  which  every  man  shall  get  exactly  what  he 
earns  and  all  he  earns;  a  world  in  which  no  man  lives  on  the  labor 
of  another." 

As  for  constructive  suggestion,  our  I.  W.  W.  have  so  little  as  to 
embarrass  the  most  indulgent  critic.  In  their  convulsive  and  in- 
cendiary appeal  to  the  forgotten  masses,  there  is,  nevertheless,  a 
saving  utility  that  should  bring  the  movement  within  our  sympa- 
thetic acceptance.  To  the  utmost,  we  should  work  with  it  as  those 
determined  to  learn,  from  whatever  source  the  message  come. 

Of  this  total  rising  protest  against  sources  of  unnatural  inequali- 
ties in  wealth  and  opportunity,  the  I.  W.  W.  is  at  most  a  very  tiny 
part.  It  is  yet  enough  that  they  are  in  it,  and  that  they  are  fully 
aware  of  the  fact.  For  the  first  time  they  are  so  consciously  related 
to  this  spirit  of  revolt  and  to  the  delicate  industrial  mechanism 
which  gives  them  power,  that  only  a  captious  temper  will  refuse 
them  hearing.  Not  by  any  churlish  aloofness  are  they  to  be  edu- 
cated, nor  are  we  ourselves  to  be  educated.  In  all  our  efforts  to 
penetrate  these  mysteries  of  social  reformation,  a  common  darkness 
is  over  us  all. 

Not  in  the  least  are  those  who  most  materially  profit  by  the 
present  system  to  be  held  in  awe  as  possessors  of  special  and  ex- 
clusive enlightenment.  There  is  also  a  "wisdom  of  the  humble" 
endowed  with  the  high  authority  of  age-long  suffering  and  experience. 
It  is  even  to  such  as  these  that  a  new  power  is  now  passing.  It  will 
not  be  taken  from  them.  It  will  be  used  in  folly  and  cruelty,  if 
society  is  also  foolish  and  cruel. 

It  is  the  final  condemnation  of  the  old  lone-hand,  fighting  spirit 
in  industry,  that  it  at  once  creates  new  and  deadlier  sources  of 
antagonism.  It  revives  on  the  spot,  not  public,  but  private  warfare, 
with  all  its  contagious  treacheries. 

The  sole  cure  for  these  barbaric  survivals  is  the  cooperative 
intention  developed  into  habits  of  thought  and  action.  This  inten- 
tion need  no  longer  expect  itself  in  vague  benevolence.  New  organs 
are  at  hand  in  which  it  may  be  embodied. 

If  we  add  to  this  the  final  best  step  of  all — the  open  declared 
purpose  to  admit  labor  to  management  first  at  safe  and  possible 
points  with  all  that  this  means  of  banished  secrets;  to  admit  it 
fearlessly  and  with  no  reserves  as  far  as  labor  proves  its  fitness;  we 


PROPOSED  PLANS  OF  ACTION  283 

then  and  there  connect  ourselves  with  the  cooperative  regime.  This 
does  not  close  the  fist,  it  opens  the  arms.  It  is  the  essence  of  this 
cooperative  intention — not  to  exclude,  but  to  include  labor  in  the 
control  of  business;  courageously  to  give  it  every  opportunity  of 
training  to  this  end.  It  will  require  the  severe  schooling  of  a 
century — but  every  strong  man  who  openly  sets  his  face  that  way, 
who  tries  consentingly  and  forbearingly  to  prove  tlie  policy  wise  is 
the  helper  to  whom  we  look. 

With  this  spirit  and  purpose  we  merely  treat  Syndicalism  at  its 
highest  and  best,  rather  than  at  its  lowest  and  worst.  At  its  ideal 
level,  we  take  it  at  its  own  word.  This  ideal  is  also  cooperation  with 
the  long  educational  drill  which  that  implies.  To  unite  with  that 
ideal,  to  bear  with  the  defeats  incident  to  its  slow  unfolding,  is  to 
work  securely  with  order  and  progress,  and  not  against  them.  It  is 
to  work  as  securely  with  the  ever  wider  and  more  intelligent  good 
will  of  every  class  and  condition  of  men  on  which  the  stability  of 
social  welfare  must  forever  depend. 

Bertra7id  Russell:  Eoads  to  Freedom*  (p.  95) 

Whatever  may  be  thought  of  the  practicability  of  Syndicalism, 
there  is  no  doubt  that  the  ideas  which  it  has  put  into  the  world 
have  done  a  great  deal  to  revive  the  Labor  Movement  and  to  re- 
call it  to  certain  things  of  fundamental  importance  which  it  had 
been  in  danger  of  forgetting.  Syndicalists  consider  man  as  pro- 
ducer rather  than  consumer.  They  are  more  concerned  to  procure 
freedom  in  work  than  to  increase  material  well-being.  They  have 
revived  the  quest  for  liberty,  which  was  growing  somewhat  dimmed 
under  the  regime  of  parliamentary  Socialism,  and  they  have  re- 
minded men  that  what  our  modern  society  needs  is  not  a  little 
tinkering  here  and  there,  nor  the  kind  of  minor  readjustments  to 
which  the  existing  holders  of  power  may  readily  consent,  but  a 
fundamental  reconstruction,  a  sweeping  away  of  all  the  sources  of 
oppression,  a  liberation  of  men's  constructive  energies,  and  a  wholly 
new  way  of  conceiving  and  regulating  production  and  economic  re- 
lations. This  merit  is  so  great  that,  in  view  of  it,  all  minor  defects 
become  insignificant,  and  this  merit  Syndicalism  will  continue  to 
possess  if,  as  a  definite  movement,  it  should  be  found  to  have  passed 
away  with  the  war. 

Graham  Wallas:  The  Great  Society  f   (p.  305) 

The  Syndicalists  ascribe  many  of  the  evils  of  parliamentary 
government  to  the  fact  that  it  is  "geographical,"  that  the  constit- 

*  Reprinted  by  permission  of  Henry  Holt  &  Co. 

t  Copyright,  The  Macmillan  Company.    Reprinted  by  permissioa 


284     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

uencies,  that  is  to  say,  consist  of  voters  merely  related  to  each 
other  as  inhabitants  of  local  areas.  Even  if  men  so  related  belong 
to  one  party,  their  appearance  of  solidarity  is,  they  say,  superficial. 
M.  Challaye  sums  up  many  syndicalist  criticisms  on  this  point  in 
the  words,  "A  political  party  is  an  aggregation  of  heterogeneous  ele- 
ments held  together  by  tlie  artificial  bond  of  similarity  in  opinion. 
In  such  a  party  men  from  all  the  social  strata  elbow  each  other, 
exchange  vague  and  sterile  platitudes,  and  attempt  to  harmonize  by 
insincere  compromises  their  essentially  antagonistic  interests." 

"The  Syndicalists  therefore  look  for  a  Will-Organization  which 
has  behind  it  some  stronger  emotion  than  that  produced  by  the  ac- 
cidental residence  in  a  few  score  of  adjoining  streets  of  a  few  thou- 
sand men  who  have  adopted  a  comm^on  party  name  for  their  opinions. 
This  Will-Organization  they  find  in  the  fact  of  common  industrial 
employment.  The  Trade  Unionist,  they  argue,  is  joined  to  his 
fellow-workmen  by  a  bond  of  things  and  deeds  not  of  words,  and 
one  for  which  experience  shows  that  he  is  always  ready  to  risk  his 
own  livelihood  and  that  of  his  children.    .    .    ." 

The  history  indeed  of  the  late-medieval  gilds  shows  both  the 
strength  and  the  weakness  of  the  Syndicalist  form  of  Will-Organiza- 
tion. The  gild-brother,  whether  painter  or  weaver  or  lawyer,  lived 
a  vigorous  and  interesting  life,  and  his  close  association  with  his 
fellows  tended  to  maintain  a  high  technical  standard  in  the  use,  and 
sometimiCS  perhaps  the  development  of  traditional  methods.  But 
even  in  the  organization  of  industry,  the  Gilds  proved  unable  to 
adapt  themselves  to  radically  new  methods,  or  to  arrange  effective 
compromises  between  the  various  crafts,  or,  where  the  two  became 
distinct,  between  the  craftsman  and  the  merchants.  They  constant- 
ly tended,  in  accordance  with  a  narrow  interpretation  of  the  pecuni- 
ary interest  of  their  existing  members,  to  restrict  the  entrance  into 
the  gild  of  "strangers,"  and  even  of  their  own  skilled  assistants,  and 
to  make  themselves  into  a  body  of  hereditary  monopolists,  en- 
joying as  employers  the  "rent"  of  the  harbor  or  trading  center  in 
which  they  were  situated. 

And  even  in  the  medieval  city,  the  management  of  Industry 
was  not  the  sole  function  of  the  Organized  Will  of  the  community. 
Police,  public  health,  and  above  all  the  management  of  the  external 
relations  of  the  city,  had  to  be  provided  for.  If  in  such  matters 
the  citizens  avoided  or  neglected  as  unreal  the  process  of  compromise 
by  which  alone  the  inhabitants  of  a  ward  could  elect  a  common 
representative  on  the  city  council,  they  only  created  the  more  diffi- 
cult task  of  arranging  compromises  later  on  between  organized  and 
hostile  interests.  Cities  which  could  enter  into  no  binding  agreement 
that  did  not  bear  the  seals  of  twenty  jealous  gilds,  and  which  could 


PROPOSED  PLANS  OF  ACTION  285 

not  keep  order  in  their  own  streets  during  a  trade  dispute,  proved 
too  weak  to  stand  against  the  more  highly  organized  national 
states  which  began  to  appear  during  the  sixteenth  and  seventeenth 
centuries.  It  proved  to  be  more  important  that  under  Syndicalism 
men  loved  each  other  less  as  citizens  than  that  they  loved  each 
more  as  Gild-brothers. 

If  Syndicalism  ever  became  the  sole  basis  of  organization  in  the 
Great  Society  all  these  difficulties  would  remain,  and  other  difficul- 
ties would  arise  from  the  change  of  scale  which  has  taken  place  since 
the  Middle  Ages.  If  the  whole  management,  not  only  of  manufac- 
ture and  trade,  but  of  foreign  affairs,  religion,  education,  health,  and 
the  thousand  functions  of  a  modern  state,  depended  upon  elections  in 
constituencies  consisting  of  whole  industries,  those  elections  would 
soon  become  as  much  a  matter  of  specialized  skill  as  the  present 
local  contests,  while  the  successful  candidates  would  be  equally 
liable  to  acquire  the  insincerities  of  the  platform.  And  however  in- 
sistently the  Syndicalist  agitators  had  preached  intuition,  the  nature 
of  things  in  a  modern  Syndicalist  state  would  throw  all  real  power 
into  the  hands  of  the  men  of  calculation. 


3.    SOCIALISM 

Emil  Vandervelde:  Socialism  versus  The  State* 
(pp.  45-6,  55,  141-2,  217-29) 

Reformist  socialism,  retaining  from  the  Communist  Manifesto 
nothing  but  its  program  for  immediate  realization,  tends  to  degenerate 
into  a  state  of  socialism,  dominated  by  parliamentary  and  electoral 
considerations. 

Revolutionary  syndicalism,  on  the  contrary,  pushing  to  extremes 
the  anti-statism  of  Marx  and  Engels,  retains  only  their  final  objec- 
tive, the  abolition  of  the  State,  and  sees  in  the  political  action  of 
the  labor  parties  only  an  accessory  or  even  a  nuisance. 

It  is  at  once  against  this  syndicalist  exclusivism  and  this  re- 
formist exclusivism  that  the  social  democracy  strives  to  react,  by 
assigning  to  the  workers  a  double  objective:  (i)  the  conquest  of  the 
state  by  the  proletariat  organized  into  political  parties;  (2)  this 
conquest  being  accomplished,  the  abolition  of  the  State  as  an  organ 
of  domination  of  one  class  over  another,  or,  to  repeat  the  expressions 
already  quoted  from  Kautsky,  "the  transformation  of  present  so- 
ciety into  a  great  economic  cooperative  by  the  centraUzation  of  the 
means  of  production." 

But  inside  the  social  democracy,  we  may  point  out  notable  di- 
vergencies as  regards  the  manner  of  conceiving  the  conquest  of  the 
State,  the  seizure  of  political  power. 

Among  the  members  of  the  International  and  of  the  parties  affili- 
ated with  the  International,  there  are  some,  on  the  right,  whose  con- 
ception does  not  greatly  differ  from  that  of  the  independent  social- 
ists or  reformists;  there  are  others,  on  the  left,  who  are  on  the  con- 
trary more  or  less  close  to  revolutionary  syndicalism;  and  between 
these  two  extremes,  we  find,  more  or  less  numerous  in  the  various 
countries,  under  the  names  of  "Marxians,"  "radicals,"  "revolution- 
ary socialists,"  militants  who  strive  to  shape  their  action  to  the 
fundamental  ideas  developed  in  the  Communist  Manifesto  and  the 
other  writings  of  Marx  and  Engels. 

As  a  matter  of  fact,  no  lines  of  demarcation  are  clearly  drawi^ 
between  these  three  groups 

*  Reprinted  by  permission  of  Charles  H.  Kerr  &  Co.,  341  E.  Ohio  St., 
Chicago. 

286 


PROPOSED  PLANS  OF  ACTION  287 

But,  in  the  democratic  countries  at  least,  the  socialist  parties  for 
the  most  part  have  departed  or  tend  to  depart  from  their  old  un- 
compromising attitude. 

They  approve  the  immediate  monopolization  or  nationalization 
of  certain  industries.  They  urge  the  seizure  of  the  railroads,  the 
mines,  the  sugar  or  petroleum  refineries.  They  have  given  over 
waiting  for  the  revolution  to  be  first  accomplished,  before  pro- 
ceeding to  partial  extensions  of  the  collective  domain,  and  thence- 
forth, one  may  well  inquire  of  himself  whether  there  can  still  be  a 
question  of  speaking  of  socialism  versus  the  State, — whether  one 
ought  not  to  admit  on  the  contrary  that,  little  by  little,  democratic 
socialism,  sliding  over  a  dangerous  precipice,  tends  to  become  a 
State  socialism. 

It  is  this  that  we  propose  to  examine,  inquiring  in  what  measure, 
under  the  pressure  of  events,  the  primitive  conception  of  Marxism 
is  being  modified,  or  must  be  modified,  on  these  two  essential  points: 

/.  The  conquest  of  political  power  by  the  proletariat ; 

2.  The  trans jormation  of  present  society  into  a  "great  economic 
cooperative  by  the  socialization  of  the  means  of  production."  .... 

But  there  is  at  least  a  germ  of  truth  in  the  opinion  of  those  who 
hold  that  the  state  is  a  bad  merchant  and  a  bad  manufacturer,  and 
who  consequently  dread  to  see,  as  a  consequence  of  the  progress  of 
statization,  the  development  of  a  sluggish,  routine-bound  bureau- 
cracy; who  rebel  at  the  thought  of  seeing  their  individual  initiative 
weakened,  and  who  see  a  serious  menace  to  liberty  in  the  trans- 
formation of  an  ever-growing  number  of  citizens  into  officials. 

Only,  we  can  not  repeat  often  enough  that  it  is  not  the  State, 
as  constituted  to-day,  to  which  the  socialists  would  assign  the  col- 
lective proprietorship  of  the  means  of  production  and  exchange. 

In  reality,  all  the  misunderstandings  that  arise  on  this  subject, 
all  the  confusions  that  possess  people's  minds  proceed  from  the 
fact  that  the  word  State — with  a  capital  S — can  be  taken  in  two  very 
different  senses. 

If  we  consult,  for  example,  Littre's  dictionary,  we  shall  find  the 
following  definitions  of  the  State:  (i)  a  body  of  people;  (2)  the  gov- 
ernment of  a  country. 

In  the  first  sense — the  body  of  the  people — it  is  true  that  the 
socialists  advocate  the  appropriation  of  the  principal  means  of  pro- 
duction by  the  State,  with  this  reservation,  however,  that  certain 
industries,  notably  the  railways,  tend  to  become  international,  and 
that  others,  having  a  local  character,  belong  within  the  municipal 
sphere. 

In  the  second  sense,  on  the  contrary — the  government  of  a 
country — it  is  absolutely  incorrect  to  say  that  the  socialists  wish  to 


288     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

entrust  the  operation  of  the  principal  industries  to  the  Government- 
State.  The  function  of  a  government,  in  brief,  is  to  govern,  not  to 
manage  industrial  enterprises,  and  to  entrust  functions  of  an  eco- 
nomic order  to  a  government  is  like  placing  a  police  officer  in  control 
of  a  lighting  plant,  or  asking  the  commander  of  an  army  corps  to 
busy  himself  with  posts,  telegraphs  and  railroads. 

Unhappily,  to-day,  when  the  State  administers  an  industry,  it 
proceeds  to  a  great  extent  in  that  very  way:  the  police  State,  the 
military  State,  is  not  sufficiently  distinct  from  the  schoolmaster 
or  industrial  State.  Their  fundamental  characters  are  the  same. 
Their  resources  become  intermingled.  Their  directing  bodies,  finally, 
are  recruited  according  to  the  same  rules 

Is  it  not  evident  that  fundamental  reforms  might  be  and  ought 
to  be  introduced  into  the  organization  of  the  industry? 

1.  The  operation  would  cease  to  have  a  fiscal  character,  and  it 
would  be  the  same  with  the  other  public  industries,  except  those 
adapted  by  their  nature  to  provide  profits  for  the  treasury,  like  the 
monopolies  of  alcohol  and  tobacco. 

2.  The  industrial  State  ought,  far  more  than  to-day,  to  have  an 
organization  quite  apart  from  the  government-State;  centralization 
is  one  of  the  characteristics  of  authority;  decentralization  is  one  of 
the  necessities  of  management. 

3.  Industrial  management  would  no  longer  belong  to  function- 
aries delegated  by  the  Government,  and  having  wage-workers  under 
their  orders,  but  to  the  entire  body  of  workers,  organized  into 
pubHc  corporations. 

Certainly,  before  these  radical  transformations  will  take  effect 
or  even  can  take  effect,  time  and  efforts  will  be  needed. 

But  from  to-day  the  whole  labor  movement,  political  as  well 
as  economic,  tends  to  this  final  result. 

The  war  has  interrupted  this  movement.  It  will  be  resumed  with 
greater  force  when  the  war  is  over. 

Already,  in  all  the  countries  where  universal  suffrage  does  not 
yet  exist,  the  people  are  demanding  it  as  the  price  of  their  sacrifices, 
and  are  thus  preparing  for  the  conquest  of  the  public  powers  by  the 
proletariat. 

On  the  day  after  the  war  we  shall  witness  a  powerful  effort  of  the 
workers  to  take  away  from  the  financial  powers  the  monopolies  to 
which  the  war  will  have  given  birth;  and  thus  we  shall  march  toward 
the  collective  appropriation  of  the  principal  means  of  production 
and  exchange. 

Industrial  union  activity,  rendered  more  intense  by  the  after-war 
difficulties,  will  create,  within  the  entrails  of  bourgeois  society,  the 


PROPOSED  PLANS  OF  ACTION  289 

organs  of  the  future  society,  the  public  corporations  which  will 
operate  the  socialized  industries  of  the  future. 

Finally,  the  resumption  of  international  relations  among  the 
workers,  the  development  of  the  society  of  nations,  the  formidable 
reaction  of  peace  against  war,  will  tend  progressively  to  restrain 
the  functions  of  the  Government-State,  at  the  same  time  that  the 
progress  of  collectivism  will  multiply  the  functions  of  the  industrial 
State. 

Thus,  little  by  little,  through  an  immense  addition  of  individual 
and  collective  efforts,  the  way  is  preparing  for  the  passage  from 
present  society  to  the  new  system,  which  a  pioneer  comrade,  Victor 
Considerant,  described  long  ago  in  his  "Destinee  sociale": 

"The  States  thus  transformed  will  be  nothing  but  managing  com- 
mittees, named  by  associations  more  or  less  numerous,  and  invested 
with  the  confidence  of  those  who  have  chosen  them.  There  is  no 
more  government  having  soldiers  and  policemen  under  its  orders; 
there  is  no  more  despotism  nor  usurpation  possible, — something  that 
nations  will  always  have  to  fear,  so  long  as  they  are  obliged  to  manu- 
facture sabers."    .... 

In  a  lecture  at  Sion  College,  February  4,  19 14,  on  the  ''principal 
currents  of  contemporary  thought,"  the  Dean  of  St.  Pauls,  the  Rev. 
Mr.  Inge,  said: 

Socialism  may  be  conceived  as  an  omnipotent  bureaucracy,  directed 
by  a  small  number  of  capable  men,  of  the  type  of  Napoleon  or  Pier- 
pont  Morgan ;  and  such  men  are  accustomed  to  high  pay  for  their 
services.  A  socialist  government  might  be  powerful  and  prosperous, 
but  it  would  have  to  rule  with  a  rod  of  iron. 

Is  it  necessary  to  repeat  that  if  this  were  socialism,  it  would 
have  no  more  energetic  opponents  than  the  socialists  themselves? 

Statism  thus  generalized  would  maintain  the  wage  system,  would 
maintain  the  authority  of  the  employer,  would  maintain  the  relations  ^ 
of  subordination  existing  between  the  ruling  class  and  the  working 
class. 

Socialism,  on  the  contrary,  implies  a  radical,  essential  change  in 
these  relations. 

It  is  not  a  question  of  replacing  private  capitalism  by  State 
capitalism,  but  private  capitalism  and  State  capitalism  by  the  co- 
operation of  the  workers,  masters  of  the  means  of  production  and 
exchange.  And  such  a  transformation,  which  suppresses  the  dis- 
tinction between  capitalists  and  workers,  is  nothing  less  than  a 
revolution. 

This  revolution^  the  social  revolution,  which  the  Manifesto  com- 


290     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

pares  to  a  geological  upheaval,  to  a  rising  of  the  lower  strata  of 
society,  overthrowing  all  the  present  legal  and  political  super- 
structures, may  be  sudden  or  slow,  may  take  the  classic  forms  of 
previous  revolutions  or,  which  is  more  probable,  may  decompose 
itself  into  a  long  series  of  partial  struggles,  more  or  less  bitter, 
more  or  less  violent;  but  on  any  hypothesis,  the  day  when  this  shall 
be  accomplished,  there  will  no  longer  be  anything  in  common  be- 
tween the  capitalist  State,  instrument  of  the  rule  of  the  possessing 
classes,  and  the  new  State,  the  socialist  State,  organ  of  management 
of  the  common  interests. 

To-day,  the  State  is  above  all  a  power  of  coercion,  of  domination, 
exercising  incidentally  certain  economic  or  social  attributes.  In  a 
socialist  regime,  on  the  contrary,  these  attributes  would  become  the 
principal  part  of  its  activity.  It  would  cease  to  dominate  the 
workers.  It  would  emanate  directly  from  them.  It  would  become 
theirs. 

In  the  economic  order,  as  in  the  political  order,  and,  in  a  general 
way,  in  all  spheres  of  collective  life,  socialism  is  not  pro-state,  but 
anti-state.  It  strives  to  bring  about  the  separation  of  the  State 
from  labor,  as  from  religion  and  from  the  family.  It  desires,  as 
the  final  term  of  this  triple  evolution,  the  State-power,  the  State 
as  organ  of  authority,  to  be  reduced,  if  not  to  nothing,  at  least  to 
secondary  functions  of  supervision  and  police.  Family  life  escapes 
from  its  control.  The  churches  are  no  more  than  free  associations 
grouping  citizens  according  to  their  philosophic  or  religious  affinities. 
The  great  cooperative  of  social  labor,  arrived  at  the  fullness  of  its 
autonomy,  administers  itself,  free  from  all  governmental  interference. 

The  realization  of  this  ideal  may  be  more  or  less  complete  and 
more  or  less  near.  But,  under  penalty  of  dangerous  deviations,  the 
proletariat  must  be  penetrated  with  it. 

We  have  put  ourselves  on  guard  against  the  excesses  of  a  sterile 
doctrinalism,  which  would  make  us  reject  any  State  intervention, 
any  resort  to  the  State,  even  to  prepare  for  discarding  it. 

We  should  guard  ourselves  far  more  against  the  contrary  ten- 
dency, which  would  see  in  the  extension  of  State  functions,  in  the 
grasp  of  the  Government  upon  the  principal  industries,  the  final 
form  and  the  triumph  of  socialism. 

In  an  interesting  letter  which  Marx  wrote  in  1873,  to  oppose  the 
ideas  of  Bakunin,  he  ridiculed  with  reason  those  anti-statists  who, 
for  fear  of  consolidating  the  bourgeois  State,  avoid  all  practical 
activity;  to  limit  the  hours  of  labor  is  compromising  with  the  ex- 
ploiters; to  strike  for  higher  wages  is  to  recognize  the  wage  system; 
to  demand  that  the  State,  whose  progress  rests  on  the  exploitation 
of  the  working  class,  should  furnish  elementary  education  to  the 


PROPOSED  PLANS  OF  ACTION  291 

children  of  laborers  or  appoint  factory  inspectors,  is  to  fortify  it 
instead  of  dissolving  and  destroying  it. 

But  it  is  not  against  such  dangers  that  warnings  are  needed 
to-day.  The  socialists  are  in  the  midst  of  political  and  social  ac- 
tivity. They  act  on  the  State  to  constrain  it  to  enact  reforms.  They 
are  demanding,  even  now,  extensions  of  its  domain.  They  are  striv- 
ing to  conquer  it,  to  turn  its  coercive  force  against  capitalism.  The 
all-important  thing  is  that  this  action  for  the  conquest  or  jar  the 
utilization  of  the  State  does  not  prevent  the  struggle  against  the 
State,  in  so  jar  as  it  is  an  organ  oj  class  rule. 

It  is  not  enough  to  say  that  it  shall  be  abolished  after  being  con- 
quered, it  is  necessary  to  prepare  for  that  abolition,  in  all  spheres 
of  social  life,  striving  to  realize,  as  against  it,  the  autonomy,  ever 
more  complete,  of  individuals  or  collectivities. 

Let  the  workers,  to  improve  their  condition,  accept  or  demand 
from  the  bourgeois  State  a  minimum  of  protection.  Let  them  prefer 
to  capitalist  monopolies  the  State  industries,  which  take  account,  at 
least  to  a  certain  extent,  of  the  general  interest.  Let  them  strive 
to  maintain,  after  the  war,  the  control  that  will  have  been  established 
over  the  principal  branches  of  production  and  exchange.  We  are 
with  them.  We  admit  all  the  value  of  these  necessary  reforms.  But 
it  is  impossible  to  repeat  often  enough,  at  the  moment  when,  every- 
where, the  progress  of  statism  during  the  war  is  represented  as  a 
partial  realization  of  collectivism, — that  these  reforms,  to  be  de- 
manded above  all  by  the  socialists,  are  not,  properly  speaking,  so- 
cialism. 

They  may  open  the  way  to  it.  They  may  be  the  preparation  and 
the  preliminary  condition  of  the  system  of  the  future.  But  they 
might,  if  we  do  not  take  care,  result  in  a  disastrous  lessening  of  the 
liberties  of  the  individual,  by  a  formidable  development  of  the 
State-power,  still  in  the  hands  of  the  master  classes. 

So  we  should  never  forget  that,  even  if  the  principal  industries 
came  to  be  incorporated  in  the  collective  domain,  the  system  of  the 
future  would  still  have  to  be  created  by  the  transformation  of  the 
State,  and  that  this  system  can  only  be  created  by  a  militant  pro- 
letariat, penetrated  to  the  marrow  with  the  injustice  of  present  social 
conditions  and  resolved  to  conquer,  by  main  force,  well-being  and 
liberty. 

Will  Durant:  The  Future  of  American  Socialism* 

The  honest  radical   (who  may  be  defined  as  the  radical  who 
would  rather  look  fact  in  the  face  than  feast  on  a  phrase)  is  di&- 
*  Reprinted  by  permission  from  The  Dial,  May  17,  1919,  p.  494. 


292      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

covering  to-day  that  the  chief  difference  between  the  exploiter  and 
the  exploited  is  the  superiority  of  the  former  in  initiative,  organi- 
zation, and  foresight.  The  rapidity  with  which  capital,  faced  by 
revolution  and  dissolution,  has  organized  its  international  in  the 
League  of  Nations,  and  the  readiness  with  which  Republicans  and 
Democrats  combine  in  localities  where  Socialism  has  become  a  men- 
ace to  all  respectable  and  God-fearing  men,  may  be  profitably 
contrasted  with  the  passion  for  fragmentation  which  has  animated 
and  dissipated  the  forces  of  reconstruction  in  Europe  and  America 
these  last  half-hundred  years.  The  same  abounding  individuality 
which  makes  a  man  a  rebel  against  Providence  and  the  police  makes 
him  also  an  impatient  item  in  any  organized  radical  group.  This  is 
an  old  story,  and  not  the  sweetest  ever  told;  particularly  painful 
to-day,  when  the  opportunity  is  so  obviously  ours  to  replace  decep- 
tive geographical  divisions  of  political  opinion  by  fundamental  hori- 
zontal divisions  drawn  to  accord  with  the  vital  and  present  interests 
of  men.  Probably  the  opportunity  will  be  lost,  and  we  poor  in- 
dividualistic Socialists  will  go  on  with  our  infinite  division,  like  a 
conscientious  mathematician  struggling  with  the  square  root  of  a 
surd. 

Part  of  the  difficulty,  of  course,  buds  out  from  the  fact  that 
radicals  deal  in  new  ideas  while  conservatives  (as  such)  deal  with 
ideas  older  than  the  hills.  A  new  idea  is  an  experiment,  a  risk,  an 
adventure;  it  leads  a  precarious  existence  always,  and  has  no  large 
expectation  of  life;  it  is  more  often  a  fashion  than  a  fact,  and  even 
as  a  fact  it  may  ride  insecurely  some  passing  crest  of  circumstance. 
So  we  whose  radicalism  is  losing  the  beardless  flush  of  youth  find 
ourselves  caught  to-day  in  a  flux  of  theory  that  has  long  since  dis- 
lodged us  from  our  cherished  isms,  and  is  sweeping  us  on  with  a 
rapidity  only  less  violent  than  the  dizzying  current  of  events.  Our 
old  fetish  of  government  ownership,  for  example,  is  no  longer  a  fit 
god  for  our  tribe;  our  enemies  too  are  beginning  to  worship  at  this 
shrine,  and  we  begin  to  feel  ill  at  ease  in  its  presence.  We  have 
become  suspicious  of  the  state  and  all  its  works;  we  distinguish 
anxiously  now  between  Socialism  and  State  Socialism — though  we 
are  rather  surer  of  what  we  do  not,  than  of  what  we  do,  mean  by  the 
former  term.  This  State  Socialism  was  a  religion  of  weakness; 
we  wished  to  be  huddled  up  in  the  great  safe  bosom  of  "the  Govern- 
ment," to  lose  our  little  worried  egos  in  a  sort  of  economic  Nirvana 
in  which  God  and  the  State  and  ourselves  melted  into  an  ethereal, 
etherized  unity.  Then  came  war;  and  overnight  the  socialized  state 
engulfed  us.  Some  of  us  are  relieved,  even  enthusiastic,  over  this 
event;  Mr.  James  MacKaye,  indeed,  rejoices  eloquently,  and  feels 
that  we  are  tobogganing  into  Utopia  ("Americanized  Socialism"; 


PROPOSED  PLANS  OF  ACTION  293 

Boni  and  Liveright).     But  some  of  us  are  skeptical,  and  think  of 
Greek  gifts. 

Now,  we  have  had  enough  of  this  Scheidemann  yellow  Socialism ; 
there  is  more  for  our  eyes  and  our  hopes  in  the  brilliant  colors  with 
which  Bolshevism  is  covering  the  canvas  of  the  world.  Soviet  is 
the  throned  word  of  the  day;  we  shall  send  our  Congressmen  back 
to  school,  and  shall  put  in  their  place  a  body  of  deputies  chosen 
by  the  producers,  rather  than  named  and  "put  through"  by  the 
investors  of  the  country.  Clearly  we  Americans  are  in  matters  po- 
litical still  at  the  imitative  stage;  we  import  our  isms  bodily  from 
Germany  (State  Socialism),  or  from  France  (Syndicalism),  or  from 
England  (Labor  Party  programs),  or  from  Russia  (Bolshevism); 
and  any  suggestion  that  these  theories  must  be  changed  to  fit  the 
peculiar  perspective  of  the  American  scene  passes  over  our  heads, 
close  to  the  clouds  though  they  be.  Mr.  Louis  Fraina,  for  example 
("Revolutionary  Socialism";  Communist  Press)  wants  a  red-hot  rev- 
olution immediately,  if  not  sooner,  and  never  doubts  that  the  pro- 
letariat of  these  United  States  is  prepared  to  take  over  all  the  means 
of  production  and  distribution,  and  to  manage  sufficiently  well  the 
complicated  interrelations  of  American  agriculture,  industry,  and 
commerce.  The  differences  in  size,  organization,  and  intelligence  be- 
tween the  business  class  in  America  and  the  business  class  in  Russia; 
the  condition,  character,  and  conservatism  of  the  average  American 
farmer;  the  presence  of  a  large  and  victorious  army;  the  individual- 
istic and  careerist  tradition  that  has  molded  us  all,  immigrant  almost 
as  much  as  native,  radical  almost  as  much  as  conservative;  the  com- 
parative (though  rapidly  decreasing)  fluidity  of  classes  in  America; 
the  secret  hope  in  almost  every  wage-slave's  heart  that  he  will  some 
day  be  a  happy  exploiter  himself,  with  a  front  pew  at  church  and 
an  ancient  coat  of  arms  on  his  stationery;  the  vast  horde  of  servants 
— "parasitic  proletariat,"  Shaw  has  called  them — ^whose  interests  are 
so  bound  up  with  the  present  regime  that  they  are  more  reactionary 
than  their  masters;  the  blurring  of  the  distinction  between  producer 
and  investor  as  a  result  of  stock-holding,  profit-sharing,  bond-pur- 
chases, and  so  on;  the  bourgeois  affiliation  of  practically  all  men 
trained  for  directive  and  administrative  functions;  above  all  the 
conservatism  of  the  dominant  group  in  the  ranks  of  organized  labor 
in  America — treacherous  details  of  this  sort  are  to  our  gentle  revo- 
lutionaries but  spots  on  the  rising  sun;  let  us  put  our  blinders  on  and 
move  forward;  "if  we  reflect  too  much  we  shall  never  act  at  all"; 
let  us  have  action,  action,  action,  and  we  can  ask  questions  after- 
ward. 

No,  we  must  take  leave  of  Mr.  Fraina  too ;  merely  recommending 


294      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

his  book  as  a  very  capable  and  sincere  exposition  of  the  revolutionary 
point  of  view. 

And  now,  having  successfully  demolished  all  other  theories, 
nothing  remains  for  us  to  do  but  to  formulate  and  establish  our  own 
nostrum.  There  are  three  questions  involved:  First,  what  do  we 
want?  (Most  of  us  stop  here.)  Second,  what  can  we  get?  (Most 
others  stop  here.)  Third,  just  how  are  we  going  to  go  about  it? 
(Some  get  thus  far.)  Most  radicalism  is  rather  an  aspiration  than 
a  resolution;  and  most  of  the  resolution  fights  shy  of  specific  pur- 
poses, methods,  and  details.  Two  things  we  can  perhaps  agree  on 
as  items  in  our  general  social  desire:  One,  that  "labor"  shall  have 
at  least  an  equal  share  with  "capital"  in  the  direction  of  industry, 
local  and  national — and  not  merely  in  the  discussion  and  arbitration 
of  lesser  industrial  disputes,  as  seems  to  be  the  upshot  of  the  Whit- 
ley Reports — until  such  time  as  all  capital  may  be  socialized  and  the 
private  investor  squeezed  out  of  existence.  Two,  that  to  our  present 
Congress,  retained  as  a  geographically  elected  body  representing  us 
as  consumers,  we  shall  add  a  national  economic  congress  of  deputies 
elected  by  agricultural  and  industrial  groups  and  representing  us  as 
producers.  The  first  of  these  two  commandments  of  the  new  dis- 
pensation is  probably  as  much  as  can  be  made  effective  at  present. 
A  revolution  might  realize  both,  or  more,  for  a  time;  but  the  lack 
of  administrative  and  commercial  training  among  the  members  of 
the  proletariat  would  presumably  result  in  a  swing  back  to  th'^ 
condition  as  here  outlined  and  here  proposed  as  within  the  bounds 
of  bloodless  attainment. 

Towards  this  prosaic  attainment  we  would  suggest,  first  of  all, 
that  some  effort  be  made  to  bring  into  general  harmony — at  least 
on  these  two  points — the  four  fundamental  forces  making  for  a 
better  social  order  in  America:  a  unified  Labor  party,  a  broadened 
Socialist  party,  a  more  partisan  Non-Partisan  League,  and  the  more 
advanced  element  in  the  very  varied  ranks  of  American  liberalism. 
The  Labor  party  would  have  to  open  its  ranks  to  all  who  live  by 
their  labor  of  hand  or  brain;  the  Socialists  would  have  to  stretch  a 
point  or  two  in  their  constitution  and  develop  a  more  flexible 
machinery;  the  rebellious  farmers  would  have  to  play  a  bolder 
game  than  heretofore,  sacrificing  some  immediate  gains  to  larger 
ulterior  purposes;  and  the  liberals — well,  can  anything  good  still  be 
said  for  the  liberals?  The  very  word  is  in  bad  odor  with  all  men  who 
can  detect  decomposition;  it  has  come  to  betoken  a  mild  and  be- 
spectacled indecision,  as  of  a  man  who  dispenses  radical  rhetoric  but 
cannot  forget  that  he  has  some  shares  in  Bethlehem  Steel.  Yet  the 
threatening  propinquity  of  revolution  is  sifting  the  ranks  of  the 
liberals,   driving  into  a   frankly   conservative  position   those  who 


PROPOSED  PLANS  OF  ACTION  295 

think  that  pills  will  do  where  surgery  is  needed;  and  the  remnant 
finds  its  hands  freer  to  work  for  some  such  program  as  has  been  here 
put  forth.  Let  then  these  four  elements  unite — Laborite,  Socialists, 
Leaguer,  and  Liberal — and  they  may  quicken  a  new  birth  which  will 
burst  the  shell  that  is  stifling  American  growth. 

But  all  this  is  politics,  and  is  mere  paper  and  ink  unless  behind 
it  stand  forceful  organizations  of  producers  and  consumers.  That 
consumers  too  must  be  organized  is  elementary,  and  hardly  calls  for 
demonstration  here.  That  our  trade-unions  must  turn  over  a  new 
leaf,  passing  from  the  isolated  consideration  of  hours  and  wages  to 
self-preparation  for  all  the  tasks  of  industrial  management  and  co- 
ordination, is  a  proposition  that  can  better  bear  repeating;  we  offer  it 
here  as  the  second  constituent  in  our  general  panacea.  The  new  so- 
ciety must  be  built  from  the  bottom  up,  with  the  remodeled  labor 
union  as  its  productive  and  directive  unit.  But  it  must  be  a 
maturer  union  than  that  which  gives  ^Ir,  Gompers  carte  blanche  to 
stultify  American  labor  in  the  conferences  of  Europe;  it  must  be- 
come worthy  of  its  future.  It  will  have  to  reorganize  on  an  indus- 
trial rather  than  a  craft  basis,  with  shop-committees  replacing  the 
old  union  machine;  it  will  have  to  broaden  its  borders  to  include  all 
producers,  manual  or  mental,  who  care  to  be  included.  So  labor 
will  (let  us  pray)  eventually  unite  itself  as  thoroughly  as  capital  is 
united;  "one  big  union"  is  indispensable  to  ultimate  labor  control 
of  production  and  distribution,  and  will  serve  as  effective  counter- 
point to  the  centralized  control  of  capital.  And  in  every  city  these 
organizations  of  labor  will  join  hands  for  all  manner  of  purposes, 
economic,  political,  recreative — and  educational.  To  this  last,  in 
the  end,  all  plans  return.  Each  great  center  of  population  must  have 
its  labor-financed  People's  L^niversity,  where  all  may  freely  learn 
who  can  show  a  producer's  card,  and  where  men  effectively  pledged 
to  labor  loyalty  may  be  selected  and  trained  to  fill,  one  by  one,  the 
places  of  direction  and  management  in  industry  and  commerce. 
And  out  of  each  such  university  may  come  a  daily  paper  accurate 
and  thorough  in  its  reports,  courageous  and  constructive  in  its  com- 
ments, managed  and  edited  by  a  board  that  will  represent  fairly 
the  varied  elements  that  are  joined  in  its  support.  To  teach  working- 
men  to  read  their  own.  press,  and  to  produce  a  labor  press  which 
workingmen  can  be  persuaded  to  read — this  is  part  of  the  prelude  to 
reconstruction. 

In  short,  we  are  not  worthy  of  a  revolution  because  we  have  not 
yet  developed  a  system  with  which  to  replace  the  order  that  we 
would  depose.  It  is  only  by  the  artificial  stimulus  of  European  ex- 
ample and  "democratic"  autocracy  at  home  that  we  are  driven  to 
think  of  it;  the  indispensable  basis  of  a  successful  revolution — the 


296     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ability  to  replace  and  improve  upon  the  existing  system — is  not  yet 
present;  certainly  less  so  here  than  in  England.  To  advocate  revolu- 
tion without  serious  conviction  of  our  ability  to  make  this  substitu- 
tion is  to  invite  workingmen  to  be  slaughtered  for  an  ideologist's 
holiday.  We  cannot  write  our  poetic  drama  yet;  we  can  only  write 
the  prologue,  and  in  prose.  We  can  only  make  straight  the  way. 
We  can  organize  our  forces,  add  to  our  resources,  and  develop  within 
our  ranks  men  fit  to  deal  wath  the  complexities  of  our  economic 
interrelations,  domestic  and  foreign;  we  can  use  our  present  power 
to  compel  the  democratization  of  industry  by  the  equal  representa- 
tion of  labor  with  capital  on  all  industrial  boards;  and  with  this 
leverage  we  can  one  by  one  replace  the  managers,  engineers,  agents, 
and  merchants  whose  hearts  are  loyal  to  the  past,  with  men  chosen 
by  the  forces  of  labor,  trained  in  the  universities  of  labor,  pledged 
to  the  purposes  of  labor,  and  directed  by  its  councils.  And  so, 
perhaps,  unheroically  but  surely,  the  new  day  will  dawn. 

James  MacKaye:  Americanized  Socialism  * 

AMERICANISM  AND   SOCIALISM 

Socialism  "Made  in  America."  Not  long  ago  I  was  talking  to 
a  typical  old-time  Yankee  farmer,  a  veteran  of  the  Civil  War,  and  a 
man  imbued  from  his  youth  wdth  the  traditional  American  way  of 
thinking.  He  asked  me  to  tell  him  what  socialism  was.  He  said 
he  had  read  about  it  in  the  newspapers  but  could  not  make  out  what 
it  meant.  I  told  him  in  brief  that  it  meant  the  operation  by  public 
officials  in  the  public  interest  of  the  railroads,  coal  mines,  steel 
works,  cotton  mills,  and  similar  industrial  activities  by  which  the 
public  would  supply  themselves  with  substantially  all  the  things 
they  needed  at  cost,  in  much  the  same  way  as  they  now  supplied 
themselves  with  postal  facilities  through  the  postoffice. 

"Is  that  socialism?"  said  he.  "Why,  I  have  believed  in  that 
for  years.  I  have  often  talked  it  over  down  at  the  store,  and  lots 
of  folks  around  here  think  as  I  do  about  it." 

This  experience  is  quite  a  comm.on  one  with  me.  I  find  wher- 
ever I  go  among  old-time  Americans  that  the  essentials  of  socialism 
are  understood  and  accepted,  often  -mth.  enthusiasm..  Indeed,  there 
are  rather  good  reasons  for  thinking  that  a  large  minority,  perhaps 
a  majority,  of  the  people  of  this  country  already  are  disposed  to 
believe  in  the  program  of  socialism,  and  w^ould  vote  for  it  if  it 
were  presented  to  them  in  the  terms  in  which  they  think.  I  am  at 
least  aware  that  the  majority  of  men  wath  whom  I  am  well  enough 

*  Copyright,  Boni  and  Liveright, 


PROPOSED  PLANS  OF  ACTION  297 

acquainted  to  know  their  real  views,  including  business,  professional, 
working  men  and  farmers,  are  believers  in  socialism,  though  very 
few  vote  the  socialist  ticket. 

Now  why  is  this?  Is  it  because  they  are  not  really  socialists  at 
heart  and  do  not  really  understand  the  issues  involved?  By  no 
means.  While  they  have  no  thorough  grasp  of  the  principles  un- 
derlying socialism  they  understand  it  at  least  as  well  as  the  average 
member  of  the  Socialist  party,  though  they  think  in  a  very  different, 
not  to  say  a  more  practical,  way  about  it.  The  Socialist  party, 
though  seeking  a  splendid  ideal,  and  one  which  must  appeal  with 
particular  power  to  people  reared  among  American  traditions — the 
ideal  of  a  cooperative  commonwealth— employs  tactics  so  defective 
that  it  may  be  seriously  questioned  whether  its  activity  is  not  more 
of  a  harm  than  a  help  to  the  progress  of  industrial  democracy  in 
this  country.  To  the  average  party  socialist  practical  socialism  is 
little  more  than  a  tail  to  the  labor  union  kite,  a  movement  to  make 
the  manual  worker  dominant  in  politics;  while  theoretical  socialism 
is  more  a  matter  of  words  than  of  ideas.  It  is  a  language  rather 
than  a  philosophy  or  a  plan.  A  few  formulas  containing  the  words 
working  class,  exploitation,  class  struggle,  surplus  value,  class  con- 
sciousness, economic  determinism,  and  some  others  "made  in  Ger- 
many" constitute  his  philosophy  of  socialism,  and  with  these  he 
seeks  to  convince  the  American  people.  Of  course  he  fails,  not  be- 
cause the  people  are  not  ready  for  the  issue,  but  because  the  Socialist 
party  does  not  know  how  to  present  it,  does  not  grasp  the  American 
way  of  thinking,  nor  speak  the  traditional  American  language. 

The  old-time  American  of  whom  I  just  spoke  and  those  like  him 
all  over  the  United  States  make  nothing  out  of  the  orthodox  so- 
cialist lingo.  It  is  all  Greek  to  them.  It  may  be  all  right  in  Eu- 
rope where  the  democratic  tradition  does  not  generally  exist,  but  in 
this  country  men  think  in  terms  of  the  traditions  common  to  the 
country,  and  to  them  the  reasoning  which  leads  to  socialism  is 
much  shorter,  clearer  and  easier  than  that  furnished  by  the  Marxian 
philosophy.  A  brief  glance  at  the  development  of  American  insti- 
tutions will  show  how  genuine  socialism  rationally  follows  from 
universally  accepted  American  traditions  familiar  to  every  American 
schoolboy.  Indeed,  the  American  theory  of  popular  government, 
which  no  politician  in  the  country  would  dare  in  terms  to  oppose, 
furnishes  the  necessary  and  sufficient  premises  on  which  the  doc- 
trine of  socialism  rests.    All  the  socialist  need  do  is  to  draw  the 

conclusion 

The  Goal  of  Americanism.  It  seems  not  unfair  to  claim  that  in 
the  foregoing  discussion  it  has  been  shown  that  capitalism  combines 
the  essential  qualities  of  monarchy  and  slavery — that  it  is  a  denial 


298      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  the  right  of  the  people  to  rule  their  own  concerns,  and  an  asser- 
tion of  the  right  of  one  man  to  consume  the  product  of  another 
man's  labor.  Both  the  denial  and  the  assertion  have  been  repudi- 
ated by  the  American  people — repudiated  at  the  cost  of  two  long 
and  bloody  wars.  They  are  absolutely  un-American  in  the  sense 
that  they  are  opposed  to  the  best  traditions  of  the  republic.  They 
are  only  tolerated  to-day  because  they  are  disguised  under  forms, 
of  which  our  people  are  indeed  deeply  distrustful,  but  the  true  nature 
of  which  is  still  obscure  to  them.  If  this  is  the  case,  then  at  least 
one  duty  of  enlightened  Americanism  seems  clear.  It  is  to  try  to 
show  to  the  American  people,  first,  the  true  relation  of  capitalism 
to  monarchy  and  slavery;  and,  second,  to  point  out  the  only  substi- 
tute for  it  consistent  with  American  ideals.  Namely,  for  the  people 
to  attend  to  their  own  industrial  affairs,  in  the  same  sense  in  which 
they  attend  to  their  own  political  affairs,  thus  replacing  industrial 
autocracy  with  industrial  democracy.  And  to  conduct  them  for 
public  service  instead  of  for  private  profit,  thus  replacing  the  prac- 
tice of  owning  something  with  that  of  doing  something  for  a  living; 
to  the  end  that  public  functions  shall  be  conducted  as  public  func- 
tions, instead  of  as  by-processes  of  private  money  making,  and  that 
no  able-bodied  adult  shall  eat  the  bread  that  another  has  toiled  and 
worked  to  produce. 

The  name  of  such  a  system  of  doing  things  ought  to  be  rather  a 
matter  of  indifference,  but  unfortunately  it  is  not,  because  men  have 
the  habit  of  judging  things  by  what  they  are  called  instead  of  by 
what  they  are.  The  word  socialism,  partly  by  the  vagaries  of  persons 
calling  themselves  socialists,  partly  by  the  successful  sophistry  of  our 
Tories,  honest  and  dishonest,  has  been  invested  with  so  much 
obscurity  and  suspicion  that  it  constitutes  a  real  handicap  to  the 
soundest,  most  practical,  and  most  typically  American  policy  which 
can  be  applied  to  our  present  industrial  problems.  The  word  so- 
cialism does  not  even  express  by  its  derivation  the  meaning  of  the 
doctrine.  Socialists  do  not  need  to  contend  for  the  socialization  of 
industry.  Every  one,  including  the  monopolist,  contends  for  that. 
What  they  contend  for  is  the  democratization  of  industry;  in  other 
words,  for  consistent  democracy,  which  is  therefore  the  proper  term 
for  what  is  now  called  socialism. 

If  it  could  be  called  democracy  or  even  nationalism,  American- 
ism, collectivism,  or  anything  suggestive  of  its  real  character,  and 
expounded  in  the  common  sense  American  fashion  of  Lincoln,  all 
the  powers  of  plutocracy  could  not  prevail  against  it,  and  some  day 
this  is  going  to  be  done. 


4.     THE  SOVIET 

Raymond  Robins:  The  Meaning  of  the  Soviet* 

The  Russian  Revolution  was  the  first  fundamental  economic 
revolution  in  the  history  of  the  world  and  the  forces  that  sprung 
from  it  will  be  challenging  the  world,  particularly  the  Western  na- 
tions, for  years  to  come.  .  .  . 

If  we  are  going  to  think  intelligently  about  Russia,  we  want  to 
separate  the  Bolshevik  party  and  its  formulas  from  the  soviet  struc- 
ture of  social  control.  There  is  in  Russia  a  new  binder  in  the 
national  life  of  the  people,  so  far  as  the  vast  mass  of  peasants  and 
workers  are  concerned,  and  that  is  the  soviet  structure  of  social 
control.  ...  At  the  very  hour  when  Kerensky  was  supposed  to  be 
exercising  authority  over  Russia,  there  were  local  Soviets  in  various 
places,  and  they  were  beginning  to  be  a  real  power  in  Russia.  Those 
Soviets  were  the  genuine  force. 

For  instance,  I  say  genuine  because  when  the  chairman  of  the 
local  soviet  said,  ''You  can  get  a  train,"  I  got  the  train;  and  when 
he  said  I  could  get  six  wagons  to  take  grain  from  the  village  to  the 
station,  I  got  six  wagons!  In  other  words,  it  was  a  genuine  social 
binder.  Now,  what  was  this  soviet?  You  hear  those  who  say  it 
was  a  mere  workmen's  revolutionary  council  in  great  cities,  and 
those  who  speak  of  great  cities  alone,  speak  truly.  That  is  true  if 
you  only  look  at  the  cities,  but  the  moment  you  turn  your  eye  on 
the  villages  you  find  an  old,  historic,  democratic  social  control, 
known  as  the  "village  mir" — a  sort  of  town  meeting,  broader  and 
narrower  than  our  town  meetings — broader  in  personnel  and  nar- 
rov;er  in  jurisdiction.  The  personnel  consisted  of  men  and  women 
with  interest  in  mir  lands  who  sat  on  equal  terms  in  the  village  mir; 
their  jurisdiction  was  narrow  because  they  were  held  to  communal 
land  questions,  roads,  to  sanitation,  and  so  on,  and  were  very 
limited  in  power.  The  Czar  and  autocracy,  afraid  of  the  demo- 
cratic character  of  the  mirs,  would  not  allow  them  to  have  delegate 
relationships  and  kept  them  within  local  environment.     As  soon  as 

*'Reprinted  by  permission  from  the  Anvah  of  the  American  Academy 
of  Political  and  Social  Science,  Vol.  LXXXIV,  No.  173,  July,  1919,  "In- 
ternational Reconstruction." 

299 


300     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  autocracy  was  repudiated,  as  soon  as  that  power  of  the  7  per 
cent  was  lifted  by  the  revolution  of  March,  191 7,  the  mirs  grew 
up  into  district,  municipal,  provincial  Soviets,  overnight,  as  it  were. 
Joining  with  the  Workmen's  Councils  of  the  great  cities,  they  be- 
came the  All-R-ussian  National  Soviet,  a  genuine  revolutionary 
binder  that  came  out  of  the  past.  And  this  is  the  only  genuine 
binder,  in  my  judgment,  that  has  existed  in  Russia  since  the  autoc- 
racy went  down.  That  is  the  structure  of  the  revolutionary  govern- 
ment of  the  mass  of  Russia.  What  party  and  what  formulas  in- 
vest that  structure  is  adventitious.  It  might  be,  as  it  is  to-day, 
the  Bolshevik  party.  It  might  be  the  Menshevik  party,  or  it  might 
be  any  other  party.  The  machinery  there  is  just  like  our  own  city 
councils  and  our  own  state  legislatures  and  our  congresses  here  under 
our  form  of  government.  The  party  that  invests  it  may  be  Re- 
publican, Democratic,  or,  if  they  get  enough  votes.  Socialist.  So 
you  get  the  difference  between  the  Bolshevik  party  and  the  actual 
social  control  of  the  soviet  structure,  which  is  a  genuine  thing  in 
my  judgment  and  the  only  revolutionary  binder  in  Russia. 

A,  J.  Sack,  Director  of  the  Russian  Information  Bu- 
reau in  the  United  States:  Anti-Soviet  * 

The  Bolsheviki  are  camouflaging  their  regime  with  the  terms 
"socialism"  and  "democracy."  In  truth,  their  regime  is  a  cari- 
cature of  these  two  great  ideals.  No  one  who  knows  the  nature 
of  socialism  will  ever  consider  the  Bolsheviki  as  Socialists,  and  no 
one  who  knows  the  nature  of  democracy  will  consider  the  Bol- 
sheviki as  democrats.  The  Bolsheviki  do  not  recognize  the  funda- 
mental principle  of  democracy — the  right  of  every  member  of  so- 
ciety, men  and  women,  to  participate  in  the  government.  Accord- 
ing to  the  so-called  soviet  constitution  there  are  entire  classes  of 
the  population  which  are  excluded  from  the  government.  And  I 
wish  to  call  attention  to  the  fact  that  this  soviet  constitution,  un- 
democratic as  it  is,  is  still  better  than  the  practical  application  of 
this  constitution  to  Russian  life.  The  Bolsheviki  have^  excluded 
from  the  government  not  only  entire  classes  of  the  Russian  popu- 
lation, but  they  have  excluded  all  the  political  parties  which  are 
deposed  by  their  regime — the  Liberals,  the  Constitutional-Demo- 
cratic party,  the  Social-Democrats,  the  Mensheviki,  and  the  Social- 
ist-Revolutionists.   .    .    . 

♦  Reprinted  by  permission  from  the  Annals  of  the  American  Academy 
of  Political  and  Social  Science.  Vol.  LXXXIV,  No.  I73,  July,  ipip,  "In- 
ternational Reconstruction." 


PROPOSED  PLANS  OF  ACTION  301 

Russia's  salvation  lies  in  the  establishment  of  a  stable  demo- 
cratic government  through  a  Constituent  Assembly  freely  chosen  by 
the  entire  population  on  the  basis  of  universal,  direct,  secret  and 
equal  suffrage.  .  .  .  The  time  has  come,  in  my  sincere  opinion, 
when  the  American  people  must  speak  for  the  Russian  democracy 
against  those  who  have  destroyed  the  new  democratic  institutions 
in  Russia,  who  have  dispersed  the  first  All-Russian  Constituent  As- 
sembly, and  who  are  doing  everything  in  their  power  to  prevent  the 
convocation  of  another  Constituent  Assembly. 

Santeri  Nuorteva,  Secretary  of  the  Bureau  of  the  Rep- 
resentative in  the  United  States  of  the  Russian 
Socialist  Federal  Soviet  Republic:  Pro-Soviet 

If  space  allowed,  I  could  present  official  statistics  of  the  indus- 
trial departments  of  the  Russian  Soviet  Government  which  would 
prove  that  in  spite  of  tremendous  obstacles  the  Russian  industries 
are  running  and  that  their  output  has  been  steadily  increasing  since 
April,  19 1 8.  .  .  .  I  admit,  and  by  admitting  it  I  am  expressing  the 
thoughts  of  our  people  in  Russia,  that  the  Soviet  government  can 
succeed  only  in  as  far  as  it  is  economically  sound.  We  know  that 
we  can  maintain  our  power  and  the  structure  of  society  which  is  in 
Russia  to-day  only  in  so  far  as  we  are  able  to  deal  with  the  realities 
of  life.  We  are  ready  to  take  upon  ourselves  the  responsibility  of 
responsible  relations  with  other  countries.  We  know  that  we  will 
not  succeed  unless  we  can  prove  that  the  system  we  represent  in 
Russia,  under  given  conditions,  is  economically  the  most  efficient. 

Editorial:  Tactics  of  the  Soviet  * 

Whether  the  ideals  of  the  Soviet  Republic  are  of  a  character 
that  can  be  tolerated  by  other  governments  is  a  question  that  turns 
mainly  upon  the  forecasts  w^e  can  form  as  to  the  solution  of  the 
problems  of  life  and  labor  under  communism.  How  will  the  Soviet 
Republic  meet  the  requirement  of  organizing  production  efficiently? 
That  consideration  is  crucial.  Much  more  depends  upon  it  than 
upon  considerations  of  the  present  attitude  of  the  Bolsheviki  toward 
property,  democracy  or  anything  else.  They  have  confiscated  prop- 
erty and  substituted  dictatorship  for  democracy.  That,  to  the 
amateur  revolutionist,  has  often  seemed  almost  the  whole  work  of 
revolution.  But  Lenin  and  his  followers  recognize  that  these  are 
merely  initial  destructive  acts,  without  any  justification  except  in 
*  Reprinted  by  permission  from  The  New  Republic,  July  2,  1919,  p.  263. 


302      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

so  far  as  a  new  productive  system  can  be  substituted  for  that 
founded  upon  private  property  and  a  new  political  system  expres- 
sive of  the  general  will  for  that  of  constitutional  democracy.  It  is 
easy  to  dissolve  a  Constituent  Assembly  if  you  have  the  guns.  It 
is  easy  to  take  a  factory  or  a  mine  away  from  its  owner.  What  is 
difficult  is  to  devise  a  new  political  scheme  which  will  offer  more 
direct  control  of  government  than  the  traditional  democratic  scheme. 
And  it  is  still  more  difficult  to  make  the  factories  and  mines  go  on 
turning  out  products  in  sufficient  volume  to  meet  the  people's  needs. 
So  strongly  have  earlier  communistic  thinkers  been  impressed  by 
this  difficulty  that  they  have  often  counseled  a  return  to  the  more 
primitive  condition  of  the  self-sufficing  community.  Let  men  live 
simply,  work  hard  and  take  their  compensation  in  the  joys  of  com- 
munity life.  The  Bolsheviki  are  guilty  of  no  such  evasion.  They 
accept  without  reservation  the  requirement  of  substituting  for  the 
old  order  a  new  one  in  which  the  average  man  will  have  more  goods 
and  better  goods,  as  well  as  a  shorter  working  day  and  more  decent 
working  conditions.  The  mere  redistribution  of  income  will  not 
achieve  this  end.     Production  must  be  made  more  efficient. 

It  may  be  said  that  after  all  this  is  not  so  difficult  a  task  as  it 
seems  because  production  in  Russia  under  the  old  order  was  notori- 
ously inefficient.  Sixty  per  cent  of  the  Russian  people  were  chron- 
ically under-fed.  A  larger  proportion  were  miserably  clad  and  lived 
in  hovels  unfit  for  brute  beasts.  Hours  of  labor  were  excessive 
and  the  physical  conditions  of  employment  abominable.  Organized 
intelligence  ought  to  be  able  to  better  such  a  situation.  But  in  the 
long  run  communistic  Russia,  if  it  survives,  must  be  able  to  meet 
comparisons  not  merely  with  the  hideous  old  Russia  so  fondly  re- 
gretted by  the  expatriated  aristocrats,  but  also  with  the  more  en- 
lightened "bourgeois"  industrial  states. 

What  brought  western  Europe  and  America  to  the  present  level 
of  material  welfare,  as  the  Bolshevik  leaders  well  know,  being 
adepts  at  economic  history,  were  mainly  three  forces,  all  of  which 
the  Soviet  Republic  proposes  to  dispense  with.  They  are  the  prac- 
tice of  private  thrift  with  the  consequent  accumulation  of  capital; 
the  pursuit  of  profits,  with  the  consequent  intense  application  of 
intelligence  to  the  problems  of  market  organization  and  the  utiliza- 
tion of  improved  processes  of  production;  and  pecuniary  emulation 
in  the  non-propertied  classes,  which  offered  the  means  of  labor  dis- 
cipline, such  as  we  know  it.  Under  the  Bolshevik  plan  of  organ- 
ization no  private  individual  will  have  any  reason  for  practicing 
thrift,  except  to  maintain'a  reserve  of  consumables  and  articles  of 
personal  use.  Profits,  though  they  may  be  admitted  exceptionally 
in  the  period  of  transition,  can  have  no  place  when  the  system  is 


PROPOSED  PLANS  OF  ACTION  303 

under  way.  Also,  during  the  period  of  transition,  exceptional  wages 
may  be  paid  for  exceptional  service.  But  that  equality  of  rewards 
is  the  definite  ideal  of  the  Bolsheviki  is  strikingly  proved  by  the 
fact  that  the  people's  commissars,  instead  of  wallowing  in  oriental 
luxury,  as  the  anti-Bolshevik  propaganda  has  charged,  actually  draw 
from  the  treasury  no  more  than  artisan's  wages.  They  do  not  mean 
to  gauge  wages  according  to  the  importance  of  the  work  done. 

What  do  the  Bolsheviki  intend  to  substitute  for  the  economic 
motive  forces  they  seek  to  eliminate?  So  far  as  thrift  is  concerned, 
the  case  is  relatively  simple.  The  Bolsheviki  are  taking  their  cue 
from  modern  corporate  practice,  which  relates  the  accumulation  of 
capital  directly  to  the  productive  process.  If  the  Steel  Corpora- 
tion wishes  to  establish  a  new  plant  it  does  not  pass  the  hat  among 
peanut  venders  and  garment  workers  for  small  savings  at  five  per 
cent.  Instead,  it  dips  a  great  scoop  into  its  own  current  profits.  A 
nationalized  industry  can  do  the  same,  provided  it  produces  a  sur- 
plus. Thus  we  are  brought  squarely  to  the  problem  of  efficiency 
of  production.  What  is  the  guarantee  of  efficiency,  with  profit 
taking  and  differential  rewards  for  labor  put  out  of  the  question? 

Accounting  will  do  the  job,  says  Lenin.  Ever}'-  commune,  every 
industrial  plant,  will  keep  accurate  accounts  of  all  operations.  Thus 
it  will  be  possible  for  the  communistic  administrators  to  tell  at  a 
glance  where  work  is  going  on  efficiently  and  where  it  is  down  at 
the  heel.  A  commune  which  is  getting  small  returns  for  its  effort 
may  address  an  inquiry  as  to  methods  to  the  communes  that  show 
extraordinary  results.  There  will  be  no  object  as  under  a  competi- 
tive regime  in  concealing  the  secrets  of  efficiency.  Perhaps  this 
idea  also  is  derived  from  the  practice  of  our  American  trusts.  At 
any  rate,  in  a  well-managed  trust,  accounting,  the  sharing  of  in- 
formation as  to  methods  and  emulation  between  units,  lies  at  the 
basis  of  efficiency.  But  in  the  case  of  the  American  trusts  there  is 
another  element  that  furnishes  the  motive  pov.er  without  which 
accountancy  is  only  dead  mechanism.  That  is  the  reward  for  effi- 
ciency, which  may  be  dazzling.  The  head  of  a  steel  mill  who  can 
cut  down  the  cost  of  steel  a  few  cents  a  ton  has  a  future  before  him. 
What  has  the  Bolshevik  plan  to  take  the  place  of  this  incentive? 

A  consciousness  of  work  well  done;  citation  in  the  official  bulle- 
tins, or  something  of  the  sort.  But  if  that  fails,  as  it  m.aj^  well  do 
unless  human  nature  is  much  more  generous  than  most  of  us  are 
willing  to  assume — what  then?  Compulsion;  punishment.  The 
writings  of  Lenin,  it  may  be  observed,  are  fairly  bristling  with  ideas 
of  penalties  and  compulsion.  Communes  that  persist  in  turning  in 
bad  records  are  to  be  ''blacklisted";  what  that  may  mean  in  a 
world  of  close  communistic  organization  it  is  uncomfortable  to  im- 


304      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

agine.  Individuals  who  fail  to  come  up  to  standards  are  "loafers," 
"saboteurs,"  "traitors."  There  is  compulsion  enough  under  the 
"bourgeois"  system,  Heaven  knows.  Demotion  and  discharge  are 
perennially  suspended  swords.  But  when  you  are  demoted  you  still 
probably  have  a  living;  when  you  are  discharged,  you  can  find  other 
employment,  usually  inferior.  WTiat  would  become  of  you  under  a 
system  in  which  there  were  no  lower  grades  for  demotion,  no  other 
em.ployments  for  a  refuge?  That  is  not  all.  Under  the  "bourgeois" 
system,  if  you  fail  to  deliver  the  goods  it  is  chiefly  your  own  affair. 
You  may  be  pitied  or  despised,  but  you  are  not  loathed.  Under  a 
communistic  system  your  lapses  are  everybody's  affair.  Is  it  not 
easy  to  conceive  the  growing  up  of  a  network  of  mutual  interfer- 
ences binding  the  whole  personnel  of  industry  together  in  a  misery 
of  irritation?  Civilization  has  worked  incessantly  for  aeons  trying 
to  teach  us  to  let  one  another  alone,  to  respect  one  another's  per- 
sonality. What  likelihood  is  there  that  this  work  would  not  be 
undone? 


5.    INDUSTRIAL   DEMOCRACY 

Frank  P.  Walsh:  The  Responsibility  of  the  Working- 
Tnan.*  Address  before  Conference  on  Demobili- 
zation, New  York,  Nov.  29-30,  1918 

I  shall  not  attempt  to  set  forth  all  the  principles  [of  the  War 
Labor  Board],  but  I  shall  refer  to  two  of  them,  the  declaration  and 
operation  of  which  might  be  gains  which  should  be  consolidated  for 
times  of  peace.  We  declared,  to  begin  with,  that  the  right  of  work- 
ers to  organize  in  trades  unions  and  to  deal  collectively  with  their 
employers  through  their  chosen  representatives,  was  by  this  confer- 
ence affirmed,  and  the  denial,  abridgment  or  interference  with  that 
right  was  forljidden  during  the  period  of  the  war — one  fundamental 
provision  being  that  there  should  be  no  strikes  or  lockouts  during 
the  war. 

When  it  came  to  the  application  of  the  first  principle  we  found 
there  were  employers  in  this  country  who  denied  that  right;  who 
claimed  the  privilege  through  the  practical  application  of  economic 
power  to  say  that  a  free-born  American  citizen  should  not  join  a 
lawful  organization  and  remain  in  his  employment.  So,  at  the  very 
outset  executive  power  had  to  be  called  upon,  and  the  first  concern 
which  denied  the  application  of  these  principles  had  to  be  reminded 
that  the  necessities  of  the  government  w^re  so  great  that  the  instru- 
mentality set  up  by  the  government  in  industry,  as  in  the  theater 
of  war,  would  be  respected  even  to  the  extent  of  taking  over  the 
industry  which  failed  to  comply  with  those  principles.  In  drafting 
the  first  principle  the  word  "employee"  was  not  used,  but  the  word 
"worker,"  something  -with  a  broader  meaning,  was  substituted.  It 
meant  that  the  man  might  no  longer  be  in  the  employ  of  that  con- 
cern, but  he  still  was  a  worker  with  a  right  to  his  job,  and  therefore 
a  right  to  appeal  to  his  government  for  justice.  In  the  great  labor 
disturbances  it  had  become  almost  the  custom  when  arbitration  was 
demanded,  either  by  the  worker  or  by  the  suffering  public,  or  by 
the  government  during  the  war,  that  the  answer  be:  "These  men 
are  no  longer  in  our  employ;  they  left  it  voluntarily.     We  have  to 

*  Reprinted  by  permission  from  Survey,  Dec.  7,  1918. 

305 


3o6      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

account  in  our  business  to  no  one  except  ourselves,  and,  therefore, 
there  is  no  real  plaintiff  to  present  a  claim  in  this  case." 

In  using  the  word  "worker"  I  hope  that  we  recognize  the  prop- 
erty right  that  a  human  being  has  in  his  job.  The  only  reason  why 
a  worker  cannot  discharge  his  employer  if  he  acts  improperly,  why 
all  the  workers  together  cannot  discharge  their  employer,  is  that 
he  stands  upon  what  is  called  his  property  right  under  the  Constitu- 
tion of  the  United  States  and  the  laws  of  this  country  and  has  a 
right  to  appeal  to  his  government  to  prevent  being  deprived  of  it. 
Unless  we  construe  the  property  rights  spoken  of  in  the  United 
States  Constitution,  and  particularly  in  the  fourteenth  amendment, 
to  be  only  large  property  rights,  the  worker  has  a  property  right  in 
his  job.  If  he  is  in  an  isolated  community  and  loses  his  job,  it  is 
easy  to  ascertain  what  he  loses:  He  must  go  to  another  place  to 
find  work,  surrender  his  home,  take  his  family  along,  pay  his  rail- 
road fare  to  the  other  place;  he  must  perhaps  put  himself  in  debt 
for  a  long,  long  time  and  be  compelled  to  pay  a  high  rate  of  interest. 

If  a  man  is  arbitrarily  discharged  from  his  work,  he  loses  the 
time  it  takes  him  to  get  another  job.  It  means,  perhaps,  that  he  has 
to  move  away  from  that  community,  and  he  has  a  property  right 
in  it.  Furthermore,  he  has  paid  his  taxes  directly  or  through  the 
rent  which  he  has  paid,  and  through  that  he  has  paid  his  share  in 
all  the  public  improvements  in  that  community.  If  he  is  a  religious 
man  he  has  paid  his  contribution  to  his  church,  which  is  an  im- 
mense consideration  for  the  foreign-born  workman  in  these  com- 
munities. Maybe  he  has  built  a  school  for  his  children,  or  else 
contributed  a  tax  for  the  public  school.  He  loses  more  than  that: 
he  has  established  a  reputation  in  that  neighborhood  and  he  has  a 
credit  which  is  as  necessary  to  his  life  as  the  credit  of  a  million 
dollars  which  his  employer  has  at  the  bank,  and  based  on  the  same 
considerations.  If  he  is  sick  the  corner  grocer  knovrs  he  is  honest, 
and  extends  his  credit  so  that  he  can  live — just  as  an  employer  can 
establish  his  credit  and  carry  his  industry  through  times  of  stress 
or  financial  depression  until  better  times  come.  To  establish  a 
basis  of  justice,  therefore,  we  must  recognize  the  property  right  a 
man  has  in  his  job. 

If  a  man  has  a  right  to  join  a  labor  organization,  it  follows  that 
he  should  be  protected  in  that  right;  protected  from  consequences 
which  are  inimical  to  him  and  which  flow  from  a  discharge  on  ac- 
coimt  of  the  exercise  of  that  right.  So  this  board  carefully  inquired 
into  every  case  of  discrimination  and  wherever  a  man  was  found 
discharged  for  that  reason,  he  w^as  ordered  returned  to  his  employ- 
ment with  full  pay  for  all  the  time  he  had  lost.  It  was  necessary 
in  order  to  enforce  this  principle  to  take  over  one  of  the  oldest  and 


PROPOSED  PLANS  OF  ACTION  307 

best  established  plants  in  the  United  States,  the  operators  of  which 
refused  to  recognize  it. 

...  I  was  impressed  deeply  by  this  idea  that  the  workers  of 
this  country  were  not  only  taking  a  broader  view  of  their  own  rights, 
but  a  much  broader  view  of  their  own  responsibilities.  They  were 
coming  definitely  to  the  conclusion  that  there  was  no  reason  for 
government  except  to  protect  the  producing  masses  of  the  commu- 
nity; that  this  was  the  only  reason  why  we  went  to  the  expense  of  a 
government.  They  were  taking  this  view  not  in  a  narrow,  con- 
tracted way,  but  believing  that  ideal  and  that  spirit  must  extend  to 
all,  no  matter  how  small  the  part  they  took  in  productive  industry, 
whether  they  were  employees  or  employers.  They  are  beginning  to 
see,  and  I  am  prepared  to  say  also  that  if  I  were  compelled  as  a 
worker  to  accept  one  of  two  autocrats,  the  autocrat  in  my  own  in- 
dustry that  I  must  contend  with  daily,  perhaps  educate  every  day, 
or  the  autocrat  in  a  government  department,  I  would  take  my  own 
little  made-to-order  autocrat  and  wrestle  it  out  with  him.  If  we 
are  to  make  that  progress  we  hope  to  make,  it  must  be  through 
actual  cooperation,  and  not  by  the  granting  of  benefits  from  one 
side  to  the  other  as  if  it  were  a  charity;  not  by  the  power  that  may 
exist  for  the  moment,  wresting  something  from  the  person  on  the 
other  side,  but  by  an  absolute  balancing  of  power.  When  the  day 
comes  that  the  power  is  absolutely  balanced,  then  and  not  until 
then,  shall  we  have  a  fair  state,  a  state  in  which  we  shall  all  feel 
that  we  are  cocperators,  not  only  to  advance  the  material  interests 
of  that  particular  government,  but  to  push  on  the  progress  of  this 
great  race,  which  we  all  hope  to  see  accomplished. 

Woodrow  Wilson:  Message  to  Congress,  May  20,  1919 

The  question  which  stands  at  the  front  of  all  others  in  every 
country  amidst  the  present  great  awakening  is  the  question  of 
labor;  and  perhaps  I  can  speak  of  it  with  as  great  advantage  while 
engrossed  in  the  consideration  of  interests  which  affect  all  countries 
alike  as  I  could  at  home  and  amidst  the  interests  which  naturally 
most  affect  my  thought,  because  they  are  the  interests  of  our  own 
people. 

By  the  question  of  labor  I  do  not  mean  the  question  of  efficient 
industrial  production,  the  question  of  how  labor  is  to  be  obtained 
and  made  effective  in  the  great  process  of  sustaining  populations  and 
winning  success  amidst  commercial  and  industrial  rivalries.  I  mean 
that  much  greater  and  more  vital  question,  how  are  the  men  and 
women  who  do  the  daily  labor  of  the  world  to  obtain  progressive 
improvement  in  the  conditions  of  their  labor,  to  be  made  happier, 


308      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

and  to  be  served  better  by  the  communities  and  the  industries  which 
their  labor  sustains  and  advances?  How  are  they  to  be  given  their 
right  advantage  as  citizens  and  human  beings? 

We  cannot  go  any  further  in  our  present  direction.  We  have 
already  gone  too  far.  We  cannot  live  our  right  life  as  a  nation  or 
achieve  our  proper  success  as  an  industrial  community  if  capital 
and  labor  are  to  continue  to  be  antagonistic  instead  of  being  part- 
ners; if  they  are  to  continue  to  distrust  one  another  and  contrive 
how  they  can  get  the  better  of  one  another,  or  what  perhaps  amounts 
to  the  same  thing,  calculate  by  what  form  and  degree  of  coercion 
they  can  manage  to  extort  on  the  one  hand  work  enough  to  make 
enterprise  profitable,  on  the  other  justice  and  fair  treatment  enough 
to  make  life  tolerable.  That  bad  road  has  turned  out  a  blind  alley. 
It  is  no  thoroughfare  to  real  prosperity.  We  must  find  another, 
leading  in  another  direction  and  to  a  very  different  destination.  It 
must  lead  not  merely  to  accommodation  but  also  to  a  genuine  co- 
operation and  partnership  based  upon  a  real  community  of  interest 
and  participation  in  control. 

There  is  now  in  fact  a  real  community  of  interest  between  cap- 
ital and  labor,  but  it  has  never  been  made  evident  in  action.  It  can 
be  made  operative  and  manifest  only  in  a  new  organization  of  in- 
dustry. The  genius  of  our  business  men  and  the  sound  practical 
sense  of  our  workers  can  certainly  work  such  a  partnership  out  when 
once  they  realize  exactly  what  it  is  that  they  seek  and  sincerely 
adopt  a  common  purpose  with  regard  to  it. 

Labor  legislation  lies,  of  course,  chiefly  with  the  States;  but  the 
new  spirit  and  method  of  organization  which  must  be  effected  are 
not  to  be  brought  about  by  legislation  so  much  as  by  the  common 
counsel  and  voluntary  cooperation  of  capitalist,  manager,  and  work- 
man. Legislation  can  go  only  a  very  little  way  in  commanding 
what  shall  be  done.  Th^  organization  of  industry  is  a  matter  of 
corporate  and  individual  initiative  and  of  practical  business  ar- 
rangement. Those  who  really  desire  a  new  relationship  between 
capital  and  labor  can  readily  find  a  way  to  bring  it  about;  and  per- 
haps Federal  legislation  can  help  more  than  State  legislation  could. 

The  object  of  all  reform  in  this  essential  matter  must  be  the 
genuine  democratization  of  industry,  based  upon  a  full  recognition 
of  the  right  of  those  who  work,  in  whatever  rank,  to  participate  in 
some  organic  way  in  every  decision  which  directly  affects  their  wel- 
fare or  the  part  they  are  to  play  in  industry.  Some  positive  legis- 
lation is  practicable. 

The  Congress  has  already  shown  the  way  to  one  reform  which 
should  be  world  wide,  by  establishing  the  eight-hour  day  as  the 
standard  day  in  every  field  of  labor  over  which  it  can  exercise  con- 


PROPOSED  PLANS  OF  ACTION  309' 

trol.  It  has  sought  to  find  the  way  to  prevent  child  labor,  and  will, 
I  hope  and  believe,  presently  find  it.  It  has  served  the  whole  coun- 
try by  leading  the  way  in  developing  the  means  of  preserving  and 
safeguarding  life  and  health  in  dangerous  industries.  It  can  now 
help  in  the  difficult  task  of  giving  a  new  form  and  spirit  to  industrial 
organization  by  coordinating  the  several  agencies  of  conciliation  and 
adjustment  which  have  been  brought  into  existence  by  the  difficulties 
and  mistaken  policies  of  the  present  management  of  industry,  and 
by  setting  up  and  developing  new  Federal  agencies  of  advice  and 
information  which  may  serve  as  a  clearing  house  for  the  best  ex' 
periments,  and  the  best  thought  on  this  great  matter,  upon  which 
every  thinking  man  must  be  aware  that  the  future  development  of 
society  directly  depends. 

Agencies  of  international  counsel  and  suggestion  are  presently 
to  be  created  in  connection  with  the  League  of  Nations  in  this  very 
field;  but  it  is  national  action  and  the  enlightened  policy  of  indi- 
viduals, corporations  and  societies  within  each  nation  that  must 
bring  about  the  actual  reforms.  The  members  of  the  committees 
on  labor  in  the  two  houses  will  hardly  need  suggestions  from  me 
as  to  what  means  they  shall  seek  to  make  the  Federal  Government 
the  agent  of  the  whole  nation  in  pointing  out  and,  if  need  be,  guid- 
ing the  process  of  reorganization  and  reform. 

Report  of  President's  Mediation  Commission  to  the 
President  of  the  United  States  Jan.  9,  1918,  by 

W.  B.  Wilson,  Chairman,  U.  S.  Secretary  of  Labor;  Ernest  P.  Marsh, 
Verner  Z.  Reed,  Jackson  L.  Spongier,  John  H.  Walker.  Felix 
Frankfurter,  Secretary  and  Counsel;  Max  Lowenthal,  Assistant 
Secretary. 

Among  the  causes  of  unrest  familiar  to  students  of  industry,  the 
following  stand  out  with  special  significance  to  the  industrial  needs 
of  war: 

(a)  Broadly  speaking,  American  industry  lacks  a  healthy  basis 
of  relationship  between  management  and  men.  At  bottom  this  is 
due  to  the  insistence  by  employers  upon  individual  dealings  with 
their  men.  Direct  dealings  with  employees'  organizations  is  still 
the  minority  rule  in  the  United  States.  In  the  majority  of  in- 
stances there  is  no  joint  dealing,  and  in  too  many  instances  em- 
ployers are  in  active  opposition  to  labor  organizations.  This  failure 
to  equalize  the  parties  in  adjustments  of  inevitable  industrial  con- 
tests is  the  central  base  of  our  difficulties.  There  is  a  commendable 
spirit  throughout  the  country  to  correct  specific  evils.     The  leaders 


310     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

in  industry  must  go  further,  they  must  help  to  correct  the  state  of 
mind  on  the  part  of  labor;  they  must  aim  for  the  release  of  normal 
feelings  by  enabling  labor  to  take  its  place  as  a  cooperator  in  the 
industrial  enterprise.  In  a  word,  a  conscious  attempt  must  be 
made  to  generate  a  new  spirit  in  industry. 

(b)  Too  many  labor  disturbances  are  due  to  the  absence  of 
disinterested  processes  to  which  resort  may  be  had  for  peaceful  set- 
tlement. Force  becomes  too  ready  an  outlet.  We  need  continuous 
administrative  machinery  by  which  grievances  inevitable  in  industry 
may  be  easily  and  quickly  disposed  of  and  not  allowed  to  reach  the 
pressure  of  explosion. 

(c)  There  is  a  widespread  lack  of  knowledge  on  the  part  of 
capital  as  to  labor's  feelings  and  needs,  and  on  the  part  of  labor  as 
to  problems  of  management.  This  is  due  primarily  to  a  lack  of 
collective  negotiation  as  the  normal  process  of  industry.  In  addi- 
tion there  is  but  little  realization  on  the  part  of  industry  that  the 
so-called  "labor  problem"  demands  not  only  occasional  attention 
but  continuous  and  systematic  responsibility,  as  much  so  as  the 
technical  or  financial  aspects  of  industry.  .  .  . 

Herbert  Croly:  Progressive  Democracy  * 

The  alternative  consists  in  the  deliberate  education  of  the  wage 
earners  for  the  position,  which  they  must  eventually  assume,  of 
being  responsible  as  a  group  of  self-governing  communities  for  the 
proper  organization  and  execution  of  the  productive  work  of  so- 
ciety. The  attempt  immediately  to  impose  such  a  responsibility  on 
the  workers  as  a  class  would  fail,  as  the  various  experiments  which 
have  already  been  made  in  self-governing  workshops  have  suffi- 
ciently proved.  The  wage-earners  must  be  gradually  trained  in 
industrial  self-government  and  in  that  ability  to  keep  their  eye  on 
their  work,  upon  which  industrial  self-government  must  in  the  long 
run  depend  for  its  success. 

The  process  of  industrial  education,  like  the  process  of  political 
education,  does  not,  however,  consist  primarily  in  going  to  school. 
It  consists  primarily  in  active  effort  on  behalf  of  an  increasing 
measure  of  self-government;  and  the  only  form  which  such  active 
effort  can  take  is  that  of  fighting  for  its  attainment.  The  indepen- 
dence of  the  wage-earners  as  a  class  would  not  amount  to  much,  in 
case  it  was  handed  down  to  them  by  the  state  or  by  employers' 
associations.  They  must  earn  it  in  the  same  way  that  every  modern 
nation  has  earned  or  protected  its  independence — that  is,  by  war- 
fare appropriate  for  the  purpose.  Their  "Constitution  of  Freedom'' 
*  Copyright,  The  Macmillan  Company.     Reprinted  by  permission. 


PROPOSED  PLANS  OF  ACTION  3" 

must  be  gradually  extorted  from  their  employers  by  a  series  of  con- 
flicts in  which  the  ground  is  skillfully  chosen  and  permanent  defeat 
is  never  admitted.  In  that  way  only  can  the  wage-earning  class 
win  effective  power,  the  devotion  of  its  own  members  and  the  respect 
of  its  opponents.  It  requires  for  the  purpose  of  this  warfare  a 
much  more  general  and  intense  feeling  of  class  consciousness  and 
responsibility  than  it  has  at  present,  and  a  much  more  tenacious  and 
enlightened  class  policy.  Practically  all  of  the  wage-earners  as  a 
group  should  be  unionized  as  the  result  of  this  warfare;  and  they 
should  be  unionized  because  of  the  substantial  benefits  which  the 
unions  were  able  to  confer  on  their  members. 

This  warfare,  in  so  far  as  it  was  successfully  conducted,  would 
be  educational  in  several  different  ways.  The  wage-earners  would 
become  actually  less  dependent  on  their  employers  and  would  have 
earned  their  independence.  Their  independence  would  be  found 
to  assume  a  definite  legal  form.  They  would  obtain  as  the  result 
of  collective  bargaining  effective  control  over  some  of  the  condi- 
tions under  which  they  worked.  Their  observation  of  the  working 
of  these  agreements  would  give  to  them  an  increasing  knowledge  of 
the  business  and  of  the  problems  and  difficulties  of  its  management. 
Finally,  their  sense  of  fellowship  with  their  classmates  would  be 
very  much  enhanced.  They  would  learn  the  necessity  of  standing 
together,  and  of  not  allowing  any  differences  in  grades  of  employ- 
ment to  divide  them  one  from  another.  All  this  would  still  be  very 
far  from  a  really  democratic  industrial  system;  but  in  so  far  as  it 
was  represented  in  definite  agreements,  it  would  assume  the  form  of 
an  industrial  constitutionalism.  The  unions  would  gradually  ap- 
propriate the  function  of  criticizing  and  vetoing  any  action  of  the 
management  of  the  business  which  vitally  affected  the  welfare  of 
employees  either  individually  or  as  a  W'hole. 

In  order,  however,  that  either  the  winning  or  the  operating  of  a 
system  of  industrial  constitutionalism  should  be  educational  in  the 
larger  social  meaning  of  the  word  as  well  as  in  a  more  limited  class 
meaning,  it  would  need  the  impulse  of  something  more  than  a  class 
ideal.  Neither  the  workers  nor  society  itself  will  ever  be  educated 
up  to  the  necessary  standards  of  industrial  democracy  merely  as  the 
result  of  a  class  struggle.  The  class  struggle  must  be  fertilized  by 
an  increasingly  general  understanding  of  the  practical  economic  and 
moral  value  of  democratizing  industry,  and  of  enabling  the  workers, 
within  limits,  to  organize  their  work  and  determine  its  conditions 
and  costs.  A  genuinely  democratic  industrial  system,  that  is,  must 
in  part  be  born  of  the  will  to  realize  in  industry  a  better  ideal  of 
human  amelioration — of  a  conscious  attempt  to  convert  internally 
remunerative  work  into  a  source  both  of  individual  and  social  fulfill- 


312      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ment.  This  ideal  must  be  freely  accepted  and  patiently  worked  out 
by  clear-sighted  and  resolute  progressive  democrats  of  all  classes. 
Those  who  believe  in  it  must  take  risks  in  its  behalf.  They  must 
seek  to  put  it  into  successful  practice  just  as  they  would  seek  to 
introduce  an  approved  labor-saving  device  into  their  business  or  an 
improved  anaesthetic  into  surgical  operations.  For  although  the 
methods  by  which  democracy  is  to  be  incorporated  into  the  economic 
system  are  experimental,  the  ideal  of  humanizing  industry  by  means 
of  an  increasing  measure  of  self-government  is  as  authentic  as  the 
process  of  civilization  itself.  The  necessity  of  reorganizing  modern 
industry  for  the  purpose  of  liberating  the  workers,  of  making  them 
responsible  for  the  success  of  their  work,  and  of  securing  and  earn- 
ing their  loyalty,  is  a  manifest  inference  from  the  very  nature  of 
social  democracy. 


Reconstruction  Program  of  the  American  Federation 

of  Labor* 

The  program  was  drafted  by  the  committee  on  reconstruction 
appointed  by  instruction  of  the  conference  of  the  American  Fed- 
eration of  Labor,  held  at  St.  Paul,  Minn.,  June  lo  to  20,  1918,  and 
has  been  endorsed  by  the  executive  council  of  the  Federation. 

The  world  war  has  forced  all  free  peoples  to  a  fuller  and  deeper 
realization  of  the  menace  to  civilization  contained  in  autocratic 
control  of  the  activities  and  destinies  of  mankind. 

It  has  caused  a  world-wide  determination  to  overthrow  and 
eradicate  all  autocratic  institutions,  so  that  a  full  measure  of  free- 
dom and  justice  can  be  established  between  man  and  man  and  nation 
and  nation. 

It  has  awakened  more  fully  the  consciousness  that  the  principles 
of  democracy  should  regulate  the  relationship  of  men  in  all  their 
activities. 

It  has  opened  the  doors  of  opportunity  through  which  more  sound 
and  progressive  policies  may  enter. 

New  conceptions  of  human  liberty,  justice,  and  opportunity  are 
to  be  applied. 

The  American  Federation  of  Labor,  the  one  organization  repre- 
senting labor  in  America,  conscious  that  its  responsibilities  are  now 
greater  than  before,  presents  a  program  for  the  guidance  of  labor, 
based  upon  experience  and  formulated  with  a  full  consciousness  of 
the  principles  and  policies  which  have  successfully  guided  American 
trade  unionism  in  the  past. 

*  From  the  Monthly  Labor  Review,  March,  1919,  pp.  64-66. 


PROPOSED  PLANS  OF  ACTION  313 


DEMOCRACY    IN    INDUSTRY 

Two  codes  of  rules  and  regulations  affect  the  workers:  The  law 
upon  the  statute  books  and  the  rules  within  industry. 

The  first  determines  their  relationship  as  citizens  to  all  other 
citizens  and  to  property. 

The  second  largely  determines  the  relationship  of  employer  and 
employee,  the  terms  of  employment,  the  conditions  of  labor,  and  the 
rules  and  regulations  affecting  the  workers  as  employees.  The  first 
is  secured  through  the  application  of  the  methods  of  democracy  in 
the  enactment  of  legislation,  and  is  based  upon  the  principle  that  the 
laws  which  govern  a  free  people  should  exist  only  with  their  consent. 

The  second,  except  where  effective  trade-unionism  exists,  is  estab- 
lished by  the  arbitrary  or  autocratic  whim,  desire,  or  opinion  of 
the  employer  and  is  based  upon  the  principle  that  industry  and  com- 
merce can  not  be  successfully  conducted  unless  the  employer  exer- 
cises the  unquestioned  right  to  establish  such  rules,  regulations,  and 
provisions  affecting  the  employees  as  self-interest  prompts. 

Both  forms  of  law  vitally  affect  the  workers'  opportunities  in  life 
and  determine  their  standard  of  living.  The  rules,  regulations,  and 
conditions  within  industry  in  many  instances  affect  them  more  than 
legislative  enactments.  It  is,  therefore,  essential  that  the  workers 
should  have  a  voice  in  determining  the  laws  within  industry  and 
commerce  which  affect  them,  equivalent  to  the  voice  which  they  have 
as  citizens  in  determining  the  legislative  enactments  which  shall  gov- 
ern them. 

It  is  as  inconceivable  that  the  workers  as  free  citizens  should 
remain  under  autocratically  made  law  within  industry  and  commerce 
as  it  is  that  the  nation  could  remain  a  democracy  while  certain  indi- 
viduals or  groups  exercise  autocratic  powers. 

It  is  therefore  essential  that  the  workers  everywhere  should  insist 
upon  their  right  to  organize  into  trade-unions,  and  that  effective 
legislation  should  be  enacted  which  would  make  it  a  criminal  offense 
for  any  employer  to  interfere  with  or  hamper  the  exercise  of  this 
right  or  to  interfere  with  the  legitimate  activities  of  trade-unions.  .  .  . 

CONCLUSION 

No  element  in  our  Nation  is  more  vitally  concerned  with  the 
problems  of  making  for  a  permanent  peace  between  all  nations  than 
the  working  people.  The  opportunities  now  before  us  are  without 
precedent.  It  is  of  paramount  importance  that  labor  shall  be  free 
and  unhampered  in  shaping  the  principles  and  agencies  affecting  the 
wage  earners'  condition  of  life  and  work. 

By  the  light  that  has  been  given  to  it  the  American  Federation 
of  Labor  has  attracted  to  its  fold  over  three  millions  of  wage  earners 
and  its  sphere  of  influence  and  helpfulness  is  growing  by  leaps  and 
bounds.     By  having   followed  safe   and  sound   fundamental  princi- 


314      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

pies  and  policies,  founded  on  freedom,  justice,  and  democracy,  the 
American  trade-union  movement  has  achieved  successes  of  an  inesti- 
mable value  to  the  masses  of  toilers  of  our  country.  By  adhering 
to  these  principles  and  policies  we  can  meet  all  problems  of  readjust- 
ment, however  grave  in  importance  and  difficult  of  solution,  with  a 
feeling  of  assurance  that  our  efforts  will  be  rewarded  by  a  still 
greater  success  than  that  achieved  in  the  past. 

Given  the  whole-hearted  support  of  all  men  and  women  of  labor 
our  organized  labor  movement  with  its  constructive  program,  its 
love  for  freedom,  justice,  and  democracy  will  prove  the  most  potent 
factor  in  protecting,  safeguarding,  and  promoting  the  general  wel- 
fare of  the  great  mass  of  our  people  during  this  trying  period  of 
reconstruction  and  all  times  thereafter. 

The  American  Federation  of  Labor  has  attained  its  present  posi- 
tion of  dignity  and  splendid  influence  because  of  its  adherence  to 
one  common  cause  and  purpose;  that  purpose  is  to  protect  the  rights 
and  interests  of  the  masses  of  the  workers  and  to  secure  for  them 
a  better  and  a  brighter  day.  Let  us  therefore  strive  on  and  on  to 
bring  into  our  organizations  the  yet  unorganized.  Let  us  concen- 
trate our  efforts  to  organize  all  the  forces  of  wage  earners.  Let  the 
Nation  hear  the  united  demand  from  the  laboring  voice.  Now  is 
the  time  for  the  workers  of  America  to  come  to  the  stand  of  their 
unions  and  to  organize  as  thoroughly  and  completely  and  compactly 
as  is  possible.  Let  each  worker  bear  in  mind  the  words  of  Long- 
fellow : 

In  the  world's  broad  field  of  battle, 
In  the  bivouac  of  life, 

Be  not  like  dumb,  driven  cattle, 
Be  a  hero  in  the  strife. 

Robert  W.  Bruere:  Immediate  Requirements 

The  most  important  immediate  requirements,  as  I  see  them,  are, 
■ — the  national  establishment  of  the  minimum  family  wage  for  all 
adult  workers,  male  and  female;  the  extension  of  the  principle  of 
organization  in  industry,  both  on  the  side  of  the  employers  and  the 
workers;  the  constitutionaHzing  of  industry  through  the  develop- 
ment of  joint  industrial  councils  on  a  national  as  well  as  upon  a  dis- 
trict and  local  community  basis;  and  the  addition  to  these  councils, 
as  to  the  staff  of  each  manufacturing  plant,  of  experts  in  human 
ps3'chology  whose  entire  business  it  should  be  to  satisfy  the  healthy 
craving  of  the  workers  for  decency,  cleanliness  and  light  in  the 
places  where  they  spend  the  greater  part  of  their  effective  lives  and 

*  Reprinted  by  permission  from  the  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  Vol.  LXXXI,  Whole  No.  170,  January, 
1919.    "A  Reconstruction  Labor  Policy." 


PROPOSED  PLANS  OF  ACTION  315 

to  inspire  both  employers  and  workers  with  the  fundamental  human 
worth  of  creative  workmanship.  When  industry  itself  becomes  the 
great  school  of  creative  workmanship  and  of  service  to  mankind 
through  production  freed  from  the  curse  of  sabotage  as  now  prac- 
ticed by  employers  quite  as  extensively  as  by  wage  workers,  we  may 
hope  that  labor  unrest  will  begin  to  disappear. 

A.  E.  Zimmern:  Nationality  and  Government  * 
(pp.  262-6) 

Both  industry  and  politics  are  faced  by  what  in  politics  is  called 
the  constitutional  problem  and  in  industry  the  problem  of  man- 
agement— that  is,  the  question  of  who  is  to  be  ultimately  responsible 
for  the  conduct  of  the  work,  and  how  that  responsibility  is  to  be  ex- 
ercised. In  politics,  so  far  as  this  and  most  Western  countries  are 
concerned,  this  problem  of  management  has  been  decided  in  favor 
of  democracy.  The  people  as  a  whole  have  taken  into  their  hands 
the  ultimate  responsibility  for  the  conduct  of  public  business,  and 
entrust  its  direction  to  ministers  or  servants,  who  are  responsible 
to  the  people  for  their  acts  and  policy.  In  industry,  however,  the 
problem  of  management  is  still  unsolved,  or  rather  it  has  hitherto 
been  decided  in  a  direction  averse  to  democracy.  The  manager  in 
industry  is  not  like  the  minister  in  politics;  he  is  not  chosen  by  or 
responsible  to  the  workers  in  the  industry,  but  chosen  by  and  re- 
sponsible to  partners  or  directors  or  some  other  autocratic  authority. 
Instead  of  the  manager  being  the  minister  or  servant  and  the  men 
the  ultimate  masters,  the  men  are  the  servants  and  the  manager  and 
the  external  power  behind  him  the  master.  Thus,  while  our  gov- 
ernm.ental  organization  is  democratic  in  theory,  and  by  the  exten- 
sion of  education  is  continually  becoming  more  so  in  practice,  our 
industrial  organization  is  built  upon  a  different  basis.  It  is  an  autoc- 
racy, but  not  an  untempered  autocracy.  It  may  perhaps  be  de- 
scribed as  autocracy  modiiied  by  Trade  Union  criticism  and  inter- 
ference and  by  parliamentary  and  administrative  control. 

To  say  that  industry  is  carried  on  by  methods  of  autocracy  is  not 
necessarily  to  impute  the  blame  to  those  who  are  responsible  for  the 
system.  It  has  yet  to  be  proved  that  it  can  be  carried  on  in  any 
other  way.  Nay,  more;  it  has  yet  to  be  sho\NTi  that  those  who  live 
under  the  system  desire  that  it  should  be  carried  on  differently. 
But  the  contrast  between  political  democracy  and  industrial  autoc- 
racy— between  the  workman  as  a  free  citizen  and  the  workman  as 
a  wage-earner — is  so  glaring  that  it  has  become  obvious  that  it 
cannot  indefinitely  continue  in  its  present  form.  Men  who  have 
*  Reprinted  by  permission  of  Robert  M.  McBride  &  Co.,  New  York. 


3i6     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

tasted  what  freedom  and  responsibility  mean  in  one  department 
of  life  are  not  likely  to  acquiesce  in  remaining  mere  irresponsible 
instruments  of  production  in  the  industrial  sphere.  The  problem  of 
management,  what  I  would  call  the  constitutional  problem  in  in- 
dustry, the  question  as  to  how  the  industrial  process  shall  be  con- 
trolled, is  already,  and  is  likely  to  continue,  the  burning  issue  in  in- 
dustrial policy.  Thus  after  our  long  excursion  in  the  philosophy  of 
politics  we  are  brought  back  to  the  practical  subject  of  this  paper. 

The  problem  of  management  is  certain  to  become  increasingly 
acute  in  the  near  future  as  a  direct  result  of  the  war.  Every  one 
is  agreed  that  the  only  way  in  which  we  can  make  good  the  losses 
of  the  war  and  meet  the  heavy  charges  incurred  is  by  increasing 
our  industrial  efficiency.  This  involves  not  only  working  harder  but 
improving  the  methods  of  organizing  our  work.  This  at  once  brings 
us  up  against  the  question  of  management.  Broadly  speaking,  there 
are  two  schools  of  opinion,  or  two  tendencies,  on  the  subject  of 
management.  There  is  the  tendency  of  those  who  would  improve 
efficiency  by  concentrating  knowledge  and  responsibility  for  work- 
manship in  the  hands  of  expert  directors,  and  the  policy  of  those  who 
believe  rather  in  the  diffusion  of  responsibility  among  the  workers. 
The  first  tendency  is  represented  by  the  advocates,  who  propose, 
in  Mr.  Taylor's  words,  that  "the  management  must  take  over  and 
perform  much  of  the  work  which  is  now  left  to  the  men,"  and  desire 
"that  there  shall  be  a  far  more  equal  division  of  the  responsibility 
between  the  management  and  the  workman  than  exists  under  any  of 
the  ordinary  types  of  management."  If  you  read  Mr.  Taylor's 
book  you  will  find  that  what  he  means  by  "a  more  equal  division 
of  the  responsibility"  is  that  the  management  is  to  do  all  the  thinking 
and  the  workman  all  the  toiling;  that  the  scientific  manager  is  to 
use  his  head  and  the  workmen  merely  their  arms  and  legs.  This  is 
autocratic  rule  with  a  vengeance;  it  takes  one  back  to  the  days  of 
slavery  and  of  the  Pyramids,  or  of  those  Assyrian  reliefs  in  the 
British  Museum  where  you  may  see  scores  of  laborers  harnessed  like 
animals  toiling  for  the  Great  King.  To  use  the  workman's  arms 
and  legs  and  to  ignore  that  he  has  a  brain  is  to  ruin  him  as  a 
craftsman  and  to  degrade  him  as  a  man.   .    .    . 

.  .  .  Mr.  Taylor  and  his  associates  may  be  perfectly  right 
when  they  are  talking  of  improved  tools;  it  is  when  they  are  dis- 
cussing the  government  of  men  that  they  are  at  fault.  We  in  this 
country,  if  we  believe  in  democracy,  are  compelled  to  look  for  the 
solution  of  the  problem  of  management  in  the  opposite  direction — 
not  in  the  management  encroaching  on  the  brainwork  of  the  men, 
but  in  the  men  being  more  closely  associated  with  the  management, 
understanding  its  difficulties,  discussing  its  problems,  and  sharing 


PROPOSED  PLANS  OF  ACTION  317 

its  responsibilities.  Our  policy  must  be,  not  to  make  output  me- 
chanically perfect  by  turning  the  workman  himself  into  a  mere 
machine,  but  to  make  our  organization  scientific  in  the  widest  sense 
by  the  voluntary  and  harmonious  cooperation  of  all  the  human 
factors  concerned.  It  is  along  this  road,  and  no  other,  that  we 
shall  reach  the  industrial  democracy  of  the  future,  towards  which 
the  English  industrial  idealists  of  the  nineteenth  century — Ruskin, 
William  Morris,  and  John  Stuart  Mill — were  bold  enough  to  point 
the  way. 

Industrial  democracy  is  a  big  word.  Let  us  try  to  bring  it  down 
from  the  clouds.  What  sort  of  organization  does  it  mean  in  actual 
practice?  First,  let  us  make  clear  what  it  does  not  mean.  It  does 
not  mean  handing  over  the  control  of  matters  requiring  expert  knowl- 
edge to  a  mass  of  people  who  are  not  equipped  with  that  knowledge. 
Lender  any  system  of  management  there  must  be  division  of  labor; 
there  must  be  those  who  know  all  about  one  subject  and  are  best 
fitted  to  deal  with  it.  Democracy  can  be  just  as  successful  as  any 
other  form  of  government  in  employing  experts.  Nor  does  demo- 
cratic control,  in  the  present  stage  at  any  rate,  involve  a  demand 
for  control  over  what  may  be  called  the  commercial  side  of  manage- 
ment— the  buying  of  the  raw  material,  the  selling  of  the  finished 
article,  and  all  the  exercise  of  trained  judgment  and  experience  that 
are  brought  to  bear  by  business  men  on  these  questions.  I  do  not 
mean  to  say  that  workpeople  are  constitutionally  incapable,  as  some 
employers  seem  to  believe,  of  running  a  business.  The  existence  of 
the  cooperative  movement  is  a  sufficient  answer  on  that  point. 
Some  day  the  Trade  Union  movement  may  follow  the  example  of 
the  cooperative  movement  and  go  into  business — possibly  on  rather 
different  lines  from  what  is  considered  business  to-day — but  at 
present  at  any  rate  the  workers'  demand  for  democratic  control  is 
not  a  demand  for  a  voice  in  the  business,  but  for  control  over  the 
conditions  under  which  their  own  daily  work  is  done.  It  is  a 
demand  for  control  over  one  side,  but  that  the  most  important  side 
because  it  is  the  human  side,  of  the  industrial  process. 

William  Leavitt  Stoddard:  The  Shop  Committee — 
Some  Lmplications  * 

Apparently  quite  out  of  the  cloudiest  of  skies  and  the  most 
vacant  of  national  minds  comes  suddenly  a  burst  of  discussion  on 
the  shop  committee.  The  chorus  is  joined  by  the  reconstruction 
committee  of  Catholic  Bishops,  by  the  inquiring  United  States 
Chamber  of  Commerce  and  the  Industrial  Conference  Board,  by 
*  Reprinted  by  permission  from  The  Dial,  July  12,  1919,  pp.  7-8. 


3i8     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

thousands  of  Methodist  pastors  and  communicants,  by  the  Federal 
Council  of  Churches  of  Christ,  by  numerous  savants  in  the  untrodden 
field  of  industrial  relations,  and  lastly  by  converted  employer  after 
employer.  Somehow  we  do  not  hear  much  of  enthusiastic  expression 
from  labor,  organized  or  unorganized.  The  apostles  and  prophets 
of  industrial  democracy  hail  mainly  from  the  side  of  management 
or  from  the  general  public. 

Let  us  at  the  start  define.  By  shop  committee  movement  we 
mean  the  movement  toward  a  sharing  of  control  of  industry  to 
large  or  small  extent  through  the  instrumentality  of  variously  con- 
stituted joint  committees  of  employer  and  employee  in  the  local 
shop  as  well  as  in  the  industry  outside  the  local  shop  or  factory 
plant.  The  shop  committee  movement  thus  includes  the  whole  pro- 
gram explained  and  promoted  in  the  classic  British  documents  of  the 
movement,  the  Whitley  and  Carton  Foundation  reports.  In  America 
the  documents  are  few.  The  best  official  paper  is  the  Wolfe  report 
published  by  the  United  States  Shipping  Board,  frankly  a  "follow- 
up"  of  the  British  plans. 

.  Regarded  physically,  the  shop  committee  in  all  its  forms  is  a 
system  of  industrial  government.  It  may  arise  either  as  a  concession 
wrung  from  capital  by  a  convincing  show  of  labor's  power,  or  as  a 
bestowal  of  enlightened  capital,  honestly  seeking  to  weather  the 
coming  storm.  Its  implications  are  manifold  and  include  considera- 
tions of  trade  unionism,  industrial  unionism,  intensive  labor  organ- 
ization, management  pure  and  simple,  'and  ever  and  always  the  de- 
velopment of  collective  bargaining  from  the  point  of  agreeing  to 
bargain  about  such  elementary  questions  as  sanitation,  to  agreeing 
to  discuss  an  entire  business,  with  the  secret  books  of  profit  thrown 
open — and  the  office  force  unionized. 

In  other  words  the  shop  committee  movement  is  nothing  or  every- 
thing. 

Narrowing  the  discussion  down  to  the  shop  committee  movement 
as  applied  to  the  individual  plant,  it  is  a  significant  fact  that  up 
to  the  time  the  United  States  Government  began  to  foster  shop 
committees  as  a  war  measure,  most  of  the  important  systems  es- 
tablished prior  to  191 8  came  directly  on  the  heels  of  bitter  labor 
wars.  A  notable  illustration  of  this  tendency  is  the  so-called  Col- 
orado plan,  set  up  by  Rockefeller  after  machine  guns  had  failed  to 
maintain  the  production  of  coal  and  iron.  Others  might  be  instanced. 
Most  of  the  shop  committee  systems  in  American  factories,  again, 
have  been  installed  either  as  a  weapon  against  the  union  or  as  a 
substitute  for  the  union.  This  also  is  a  significant  fact,  though 
officially  the  shop  committee  movement  is  neutral  on  the  union  ques- 
tion. 


PROPOSED  PLANS  OF  ACTION  319 

In  form  the  shop  committee  is  widely  various.  We  may  trace 
the  beginnings  of  certain  types  of  shop  committee  systems.  There 
is,  for  example,  the  type  which  gives  employees  elected  representa- 
tives in  the  proportion  of  one  to  every  hundred  or  hundred  and 
fifty  employees,  largely  irrespective  of  craft.  There  is  the  type  which 
is  founded  on  the  United  States  Government,  consisting  of  a  house, 
composed  of  employee  representatives,  a  senate,  composed  of  fore- 
men, and  a  cabinet  composed  of  the  executive  staff  with  the  manager 
as  president.  There  is  the  type  which  gives  more  complete  repre- 
sentation to  craft.  There  are  combinations  of  these  types.  In  each 
type  runs  the  principle  that  the  elected  representatives  of  the  em- 
ployees must  be  elected  secretly  by  the  employees  of  the  particular 
plant,  in  the  plant,  and  solely  as  of  the  plant.  All  the  types  thus 
briefly  described  may  be  benevolently  handed  down,  ready-made, 
by  the  management,  or  they  may  be  devised  in  honest,  open  con- 
ference by  men  and  management,  acting  jointly.  There  are  also 
patent  shop  committee  systems,  sold  by  industrial  experts,  and 
guaranteed  to  do  away  with  agitators  and  to  lift  profits  to  unheard 
of  percentages. 

The  details  of  the  actual  machinery  of  a  shop  committee  system 
in  a  factory  need  not  concern  us  at  this  moment.  They  are  indeed 
vital,  but  they  can  have  no  vitality  whatever  unless  before  the  mo- 
ment of  creation  there  is  on  both  sides  the  right  spirit.  The  em- 
ployer should  have  the  desire  to  treat  with  his  employees  coMectively, 
irrespective  of  union  affiliation,  and  he  ought  to  be  awake  to  the 
fact  that  the  time  has  come  when  employers  must  no  longer  oppose, 
but  must  rather  assist,  the  birth  of  the  new  industrial  age.  The 
employee  should  have  the  sense  to  see  that  something  is  better  than 
nothing  and  that  however  much  it  may  be  the  object  of  a  specific 
management  to  bolster  up  an  outworn  business  code  or  to  sign  a 
peace  treaty  on  such  terms  that  peace  is  unstable,  almost  any  shop 
committee  organization  gives  him  a  position  from  which  he  may — 
may — move  the  world. 

Cyrus  McCormick,  Jr.,  is  quoted  as  saying  lately: 

What  the  workingman  is  asking  for,  and  what  we  are  trying  to  give 
him,  is  a  voice  in  the  control  of  the  business  in  which  he  is  a  co-part- 
ner. This  demand  has  taken  on  various  forms  in  different  places.  In 
Russiaand elsewhere  on  the  European  continent  it  is  known  as  Bolshe- 
vism ;  in  England  they  call  it  the  Whitley  plan ;  elsewhere  it  may  be 
called  employees'  representation,  and  somewhere  else  co-partnership. 
Under  all  of  these,  however,  it  is  the  basic  fact  that  the  relationships 
between  employer  and  employee  must  be  founded  on  something  else 
than  a  cash  bond.  .  .  .  With  every  one  of  our  hitherto  most  guarded 


320     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ledgers  open  to  these  men,  we  believe  that  they  would  see  the  facts  as 
clearly  as  we  saw  them.  .  .  .  Don't  attempt  any  fraternalism. 

Mr.  McCormick  is  further  quoted  as  expressing  his  regret  that 
the  Harvester  Council  plan  was  not  worked  out  in  joint  conference 
between  his  employees  and  his  executives,  but  was  handed  down  by 
the  corporation.  His  views  are  those  of  the  enlightened  and  en- 
lightening employer  of  to-day.  They  are  radically  advanced  over 
the  views  of  employers  of  the  ante-war  days. 

When  we  come  to  look  at  the  small  beginnings  of  the  industrial 
council  branch  of  the  shop  committee  movement  in  the  United 
States  we  find  that,  as  in  the  shop  committee  branch  strictly  so 
called,  the  Government  during  the  period  of  active  hostilities  made 
several  attempts  to  form  such  joint-action  agreements,  but  had  rather 
less  success  than  met  its  efforts  to  inspire  shop  committee  systems. 
In  the  last  few  weeks  the  allied  printing  trades  for  one,  and  the 
building  trades  for  another,  have  voted  on  joint  council  schemes 
which  were  worked  out  by  the  collaboration  of  representatives  of 
the  international  Unions  interested  and  representatives  of 
the  masters'  associations.  This,  then,  is  a  more  natural  and  self- 
determining  growth  than  the  simple  shop  committee,  formulated 
in  the  bulk  and  mainly  promoted  by  the  employers.  It  is  the 
natural  combination  of  labor  and  capital,  inspired  by  a  willingness 
to  clear  out  the  underbrush,  so  to  speak,  which  bothers  the  feet  of 
both,  and  inspired  also  by  the  accompanying  hope  that  such  clear- 
ance of  the  ground  will  make  for  less  unimportant  bickering,  and — as 
labor  looks  at  it — for  fairer  and  better  fighting  about  essentials. 

It  is  evident  that  the  implications  of  such  a  movement  are  of 
the  utmost  importance.  An  obvious  fear  is  lest  it  be  some  subtle 
scheme  of  capital  the  further  to  subjugate  labor.  An  equally  obvious 
fear — I  speak  now  from  knowledge  of  the  employer's  psychology  and 
prejudice — is  that  in  some  underhanded  way  the  shop  committee  is 
designed  to  deliver  over  capital  to  the  talons  of  labor.  Were  not 
these  phobias  real,  we  could  dismiss  them  as  silly.  In  the  long  run, 
discounting  small  errors  of  judgment  and  purpose,  the  shop  com- 
mittee is  exactly  what  it  seems  to  be,  mainly  a  simple,  open,  and 
practicable  method  of  collective  bargaining  which  will  become  noth- 
ing but  advanced  welfare  work  if  one  side  or  the  other  lags  in  its 
duty,  and  which  can  become  an  amazingly  useful  instrument  to  pre- 
pare the  way  for  an  advance  in  the  condition  and  status  of  labor, 
educationally  and  economically. 

In  so  far  as  the  shop  committee  movement  is  being  used  by  em- 
ployers to  cut  in  under  the  union  movement,  whether  trade  or  in- 
diistrial,  it  is  doomed  to  failure.    I  have  noted  that  in  specific  in- 


PROPOSED  PLANS  OF  ACTION  321 

stances  it  originated  in  an  anti-union  mood.  Fundamentally  the  shop 
committee  is  unionism.  It  is  based  on  the  theory  of  collective  ac- 
tion. It  advances  a  more  intensive  kind  of  collective  action 
than  the  usual  trade  union  offers.  Striking  evidence  of  this  is 
the  fact  that  the  shop  committee  movement  in  England  is  largely  an 
insurgent  movement  Vv'ithin  the  trade  union  movement,  colored  by 
antagonism  both  to  slow  trade  union  methods  and  to  an  over-strict 
adherence  to  craft  independence.  Ideally  as  well  as  in  practice, 
the  shop  committee  favors  direct  collective  dealing  by  workers  in  an 
industrial  unit  with  employers  in  the  same  unit.  While  it  is  too 
young  to  give  us  a  firm  ground  for  prediction,  it  is  at  least  safe  to 
say  that  if  it  is  understood  and  backed  by  the  national  organized 
labor  movement,  labor  has  from  it  much  to  gain.  In  fact  the  main 
weakness  of  the  shop  committee  in  this  country  to-day  is  that  the 
larger  labor  movement  is  suspiciously  holding  off. 

One  might  draw  an  analogy  between  the  history  of  the  Taylor 
efficiency  scheme  in  the  United  States  and  in  Russia.  Here  labor 
fights  it  as  labor  fought  the  introduction  of  machinery — an  instinc- 
tive recoil  from  a  device  of  production  possessed  solely  by  employers 
and  controlled  non-collectively  by  employers.  In  Russia,  the  Soviet 
Government  is  out-Tayloring  Taylor  by  attempting  to  utilize  effi- 
ciency in  the  interests  of  the  entire  industrial  world  instead  of  in  the 
interests  of  a  small  if  important  fraction  thereof. 

We  may  expect  to  have  the  shop  committee  with  us  from  now 
on  permanently.  Its  vigor  and  utility  depend  on  both  the  degree 
and  the  charactei  of  labor  organization.  The  risk  is  that  it  will  be 
paternalized  or  fraternalized  and  thus  ruined.  This  risk  is  deemed 
worth  running  by  those  who  hope  that  an  industrial  revolution  can 
be  accomplished  here  without  undue  bloodshed. 

Louis  D.  Brandeis:  Right  to  Share  Bespondhility  * 

Unrest,  in  my  mind,  never  can  be  removed,  and  fortunately 
never  can  be  removed,  by  mere  improvement  of  the  physical  and 
material  condition  of  the  workingman.  If  it  were  we  should  run 
great  risk  of  improving  their  material  condition  and  reducing  their 
manhood.  We  must  bear  in  mind  all  the  time  that  however  much 
we  may  desire  material  improvement  and  must  desire  it  for  the 
comfort  of  the  individual,  that  we  are  a  democracy;  and  that  we 
must  have,  above  all  things,  men;  and  it  is  the  development  of 
manhood  to  which  any  industrial  and  social  system  must  be  di- 
rected. We  are  committed  not  only  to  social  justice  in  the  sense 
of  avoiding  things  which  bring  suffering  and  harm  and  une'^uaJ 
*  Final  report  Federal  Commission  on  Industrial  Relations. 


322      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

distribution  of  wealth;  but  we  are  committed  primarily  to  democ- 
racy, and  the  social  justice  to  which  we  are  headed  is  an  incident  of 
our  democracy,  not  an  end  itself.  It  is  the  result  of  democracy,  but 
democracy  we  must  have.  And  therefore  the  end  to  which  we  must 
move  is  a  recognition  of  industrial  democracy  as  the  end  to  which 
we  are  to  work,  and  that  means  this:  It  means  that  the  problems 
are  not  any  longer,  or  to  be  any  longer,  the  problems  of  the  em- 
ployer. The  problems  of  his  business — it  is  not  the  employer's  busi- 
ness. The  union  can  not  shift  upon  the  employer  the  responsibility 
for  the  conditions,  nor  can  the  employer  insist  upon  solving,  accord- 
ing to  his  will,  the  conditions  which  shall  exist;  but  the  problems 
which  exist  are  the  problems  of  the  trade;  they  are  the  problems  of 
employer  and  employee.  No  possible  degree  of  profit-sharing,  how- 
ever liberal,  can  meet  the  situation.  That  would  be  again  merely 
dividing  the  proceeds  of  business.  That  might  do  harm  or  it  might 
do  good,  dependent  on  how  it  is  applied. 

No  mere  liberality  in  the  division  of  the  proceeds  of  industry  can 
meet  this  situation.  There  must  be  a  division  not  only  of  the  profits, 
but  a  division  of  the  responsibilities;  and  the  men  must  have  the 
opportunity  of  deciding,  in  part,  what  shall  be  their  condition  and 
how  the  business  shall  be  run.  They  also,  as  a  part  of  that  re- 
sponsibility, must  learn  that  they  must  bear  the  results,  the  fatal 
results,  of  grave  mistakes,  just  as  the  employer.  But  the  right  to 
assist  in  producing  the  results,  the  right,  if  need  be,  the  privilege 
of  making  mistakes,  is  a  privilege  which  cannot  be  denied  to  labor, 
just  as  we  must  insist  on  their  sharing  the  responsibility  for  the  re- 
sult of  the  business. 

Meyer  Bloom  field:  Management  and  Men* 
(pp.  30,  66,  98) 

The  war  has  shown  in  Great  Britain  the  vastness  of  the  slack 
or  reserve  energy  which  can  be  used  for  the  national  need.  The 
repair  of  the  deteriorated  or  damaged  fabric  of  industry,  the  furnish- 
ing of  new  capital  for  expanded  ventures  in  foreign  trade,  moderniz- 
ing industrial  plants,  new  taxation  burdens  of  the  war  legacy,  the 
high  rate  of  interest  which  must  prevail — these  things  will  make  it 
impossible  to  continue  the  level  of  real  wages  and  standard  of  com- 
fort which  have  reached  down  to  classes  formerly  quite  submerged 
in  the  scale  of  industry,  without  a  very  large  increase  in  the  aggre- 
gate product.  Labor  and  capital  are  busy  with  solutions  of  this 
huge  problem.  Never  before  have  groups  of  industrial  captains  and 
representatives  of  workmen  been  so  much  in  conference  as  they  axe 
*  Reprinted  by  permission  of  the  publishers,  The  Century  Co. 


PROPOSED  PLANS  OF  ACTION  323 

during  these  days.  They  are  busy  sizing  up  the  problem  and  laying 
down  the  rules  of  the  game.  Both  sides  have  learned  lessons  of 
value  out  of  their  war  experience.  They  accept  the  proposition  of 
more  and  better  work,  a  larger  use  of  the  man  power  of  the  country, 
better  organization  and  discipline  of  the  labor  forces,  more  enter- 
prise and  wisdom  on  the  part  of  managers  and  employers,  a  larger 
application  of  science  to  industry,  better  industrial  training — these 
are  the  topics  they  confer  about,  knowing  that  to  settle  these  matters 
is  to  assure  the  production  which  alone  means  prosperity  for 
all.   .    .    . 

.  .  .  The  big  production  which  every  manufacturer  is  looking 
forward  to  will  have  in  view  the  big  fact  that  confidence  between 
management  and  men  is  the  only  lasting  foundation  on  which  to  get 
results.  ]\Aore  output  and  more  mutual  confidence  will  go  hand  in 
hand.  There  is  no  question  in  any  quarter  that  increased  efficiency 
must  come  soon.  It  is  under  way  right  now.  Both  the  volume  and 
the  quality  of  output  are  considerations  in  every  program  of  the 
merchant  and  manufacturer. 

To  get  this  result  industrial  leaders  are  looking  in  the  direction 
of  improving  the  organization  and  its  personnel,  of  eliminating  waste 
and  friction,  and  most  important  of  all,  of  giving  enough  attention 
to  the  problem  of  increasing  of  opportunities  of  cooperation  be- 
tween management  and  men.  The  best  employers  here  appreciate 
the  fact  that  raising  the  level  of  productive  capacity  is  finally  a 
question  of  improving  the  conditions  under  which  the  work  is  done 
and  the  spirit  in  which  the  parties  concerned  carry  on  under  the 
same  roof.  There  has  been  far  too  great  a  sacrifice  during  an 
eternity  of  the  war  period,  and  both  this  country  and  the  world  in 
general  are  too  sorely  in  need  of  recuperation  for  much  patience  with 
the  slacker — the  moral  slacker  as  well  as  the  industrial  slacker. 
And  a  moral  slacker  is  a  man  who  will  not  play  the  game  according 
to  the  new  rules  and  the  new  ideals  of  industrial  team  play.  .  .  . 

Industry  is  at  bottom  a  problem  in  man  power.  That  problem 
is  big  enough  to  call  for  every  ounce  of  intelligence  and  force  latent 
and  active  not  only  in  the  managing  staff  but  in  the  anonymous 
rank  and  file.  How  to  pool  for  the  good  of  industry,  and  of  those 
who  work  in  it,  all  that  scattered,  sometimes  discordant  and  gener- 
ally too  little  used  human  power,  is  the  big  problem  before  those 
who  are  looking  ahead. 


324      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Address  before  Conference  on  Demobilization,  Noveni' 
ber  29-30j  1918.  Feliai  Frankjurter,  Chairman, 
War  Labor  Policies  Board, 

I  think  the  very  restless  condition  of  American  industry  to-day 
and  the  limitations  of  the  labor  movement  are  due  to  the  fact  that 
all  these  years  the  energies  of  the  American  labor  movement  have 
been  absorbed  in  a  continual  fight  to  establish  a  principle  that 
should  be  an  accepted  commonplace,  namely,  the  legitimacy  of  labor 
organization.  The  unions  still  must  fight  for  their  life  instead  of 
being  a  recognized  social  instrument  tested  by  their  contributions 
to  the  community  as  a  whole.  Not  until  they  are  generously  and 
frankly  recognized  as  having  a  rightful  place  in  our  national  life 
will  the  leaders  of  labor  have  time  and  energy  to  give  to  the  solution 
of  the  difficult  social  and  industrial  problems  with  which  organized 
labor  should  concern  itself. 

President  Taft  said  the  other  day,  in  effect,  that  the  time  has 
come  to  recognize  labor  organization  as  an  essential  and  beneficial 
institution.  If  that  recognition  could  be  made  by  opinion  through- 
out the  country,  if  the  fighting  spirit  imposed  by  capital  upon  labor 
were  withdrawn,  then  we  could  proceed  to  the  question  which  this 
conference  raises,  namely:  How  shall  we  release  the  energies  of  the 
masses  of  the  people  who  are  workers,  so  that  our  civilization  shall 
not  only  remove  the  sores  and  injustices  which  infest  it,  but  shall  be 
something  fit  and  adequate  for  democracy?  But  our  traditions  of 
laissez  jaire  are  tenacious.  The  direct  participation  of  government 
is  likely  to  be  a  meager  one  in  the  next  few  years.  The  dominant 
hope,  to  one  who  has  watched  as  closely  as  he  could,  is  not  in  gov- 
ernment, but  in  the  consensus  of  public  opinion  that  must  assert 
itself  in  industry.  For  here  is  the  fundamental  evil  in  our  social  life 
which  needs  correction:  the  basic  recognition  which  must  be  made 
is  that  all  the  ills  with  which  we  have  to  deal  throughout  the  coim- 
try — bad  housing,  lack  of  protection  for  child  life,  and  all  the  other 
things  which  go  to  make  the  conditions  which  social  workers  know 
of — are  in  largest  measure  due  to  faulty  organization  of  industry, 
a  wrong  conception  of  industry's  relation  to  society. 

What  American  business  needs  is  a  substitution  of  the  processes 
of  law  and  order  for  the  present  oscillation  between  anarchy  and 
autocracy  by  which  it  is  too  largely  governed.  But  not  the  ''law" 
of  an  imposed  will,  and  the  "order"  of  the  police  club.  Not  until 
we  realize  that  a  copper  camp  is  a  community  and  that  a  factory 
makes  the  same  demand  upon  its  people  as  our  political  institutions, 
not  until  we  constitutionalize  industry  shall  we  approach  «uright  our 


PROPOSED  PLANS  OF  ACTION  325 

industrial  questions.  Not  until  American  industry  realizes  that  the 
problems  are  too  vast  and  too  intricate  to  be  dealt  with  only  by 
looking  at  one  side,  not  until  management  realizes  that  the  labor 
movement  is  essentially  not  a  "belly  movement,"  but  a  movement 
for  the  assertion  of  personality,  and  the  workman  recognizes  that 
industry  is  a  complicated  organism,  shall  we  see  the  light.  That 
will  not  come  until  in  industry  we  introduce  those  principles  of 
representative  constitutional  government  which  have  been  worked 
out  in  England  and  America  for  three  hundred  years.  Not  until 
workers  and  managers,  by  consultation  and  understanding,  acquire 
reciprocal  understanding  and  reciprocal  discipline,  and  deal  with 
the  problems  which  concern  both,  not  until  those  principles  which 
we  have  proved  and  tested  and  established  in  our  political  life  are 
transferred,  with  the  necessary  adaptation  to  our  industrial  life,  can 
we  really  deal  with  any  permanence  with  the  questions  which  the 
war  has  left  as  legacies  to  social  agencies  and  the  country  at  large. 


VIII.     INDUSTRIAL   DOCTRINES    IN   DEFENSE   OF   THE 

STATUS  QUO 


I.    THE  ECONOMIC  MAN 

Walter  Lippmann:  Drift  and  Master 7/*   (pp.  27-31, 

45-9) 

NEW  INCENTIVES 

We  say  in  conversation:  "Oh,  no,  he's  not  a  business  man, — he 
has  a  profession."  That  sounds  like  an  invidious  distinction,  and  no 
doubt  there  is  a  good  deal  of  caste  and  snobbery  in  the  sentiment. 
But  that  isn't  all  there  is.  We  imagine  that  men  enter  the  pro- 
fessions by  undergoing  a  special  discipline  to  develop  a  personal 
talent.  So  their  lives  seem  more  interesting,  and  their  incentives 
more  genuine.  The  business  man  may  feel  that  the  scientist  content 
with  a  modest  salary  is  an  improvident  ass.  But  he  also  feels  some 
sense  of  inferiority  in  the  scientist's  presence.  For  at  the  bottom 
there  is  a  difference  of  quality  in  their  lives, — in  the  scientist's  a 
dignity  which  the  scramble  for  profit  can  never  assume.  The  pro- 
fessions may  be  shot  through  with  rigidity,  intrigue,  and  hypocrisy: 
they  have,  nevertheless,  a  community  of  interest,  a  sense  of  crafts- 
manship, and  a  more  permanent  place  in  the  larger  reaches  of  the 
imagination.  It  is  a  very  pervasive  and  subtle  difference,  but 
sensitive  business  men  are  aware  of  it.  They  are  not  entirely  proud 
of  their  profit-motive:  bankers  cover  it  with  a  sense  of  importance, 
others  mitigate  it  with  charity  and  public  work,  a  few  dream  of 
railroad  empires  and  wildernesses  tamed,  and  some  reveal  their  sense 
of  unworthiness  by  shouting  with  extra  emphasis  that  they  are  not 
in  business  for  their  health. 

It  is  a  sharp  commentary  on  the  psychological  insight  of  the 
orthodox  economist  who  maintains  that  the  only  dependable  motive 
is  profit.  Most  people  repeat  that — parrot-fashion,  but  in  the  rub 
they  don't  act  upon  it.  When  we  began  to  hear  recently  that  radium 
might  subdue  cancer,  there  was  a  fairly  unanimous  demand  that  the 
small  supply  available  should  be  taken  over  by  the  government  and 
removed  from  the  sphere  of  private  exploitation.  The  fact  is  that 
men  don't  trust  the  profiteer  in  a  crisis,  or  wherever  the  interest 
at  stake  is  of  essential  importance.    So  the  public  regards  a  professor 

*  Reprinted  by  permission  of  Henry  Holt  and  Company. 

329 


330     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

on  the  make  as  a  charlatan,  a  doctor  on  the  make  as  a  quack,  a 
woman  on  the  make  as  an  adventuress,  a  politician  on  the  make  as 
a  grafter,  a  writer  on  the  make  as  a  hack,  a  preacher  on  the  make  as 
a  hypocrite.  For  in  science,  art,  politics,  religion,  the  home,  love, 
education, — the  pure  economic  motive,  profiteering,  the  incentive  of 
business  enterprise  is  treated  as  a  public  peril.  Wherever  civiliza- 
tion is  seen  to  be  in  question,  the  Economic  Man  of  commercial 
theorists  is  in  disrepute. 

I  am  not  speaking  in  chorus  with  those  sentimentalists  who 
regard  industry  as  sordid.  They  merely  inherit  an  ancient  and 
parasitic  contempt  for  labor.  I  do  not  say  for  one  instant  that 
money  is  the  root  of  evil,  that  rich  men  are  less  honest  than  poor, 
or  any  equivalent  nonsense.  I  am  simply  trying  to  point  out  that 
there  is  in  every-day  life  a  widespread  rebellion  against  the  profit 
motive.  That  rebellion  is  not  an  attack  on  the  creation  of  wealth. 
It  is,  on  the  contrary,  a  discovery  that  private  commercialism  is  an 
antiquated,  feeble,  mean,  and  unimaginative  way  of  dealing  with  the 
possibilities  of  modern  industry. 

The  change  is,  I  believe,  working  itself  out  under  our  very  eyes. 
Each  day  brings  innumerable  plans  for  removing  activities  from  the 
sphere  of  profit.  Endowment,  subsidy,  state  aid,  endless  varieties  of 
consumers'  and  producers'  cooperatives;  public  enterprise — they 
have  been  devised  to  save  the  theater,  to  save  science  and  invention, 
education  and  journalism,  the  market  basket  and  public  utilities  from 
the  life-sapping  direction  of  the  commercialist.  What  is  the  mean- 
ing of  these  protean  efforts  to  supersede  the  profiteer  if  not  that 
his  motive  produces  results  hostile  to  use,  and  that  he  is  a  usurper 
where  the  craftsman,  the  inventor  and  the  industrial  statesman 
should  govern?  There  is  no  sudden  substitution  of  sacrifice  for 
selfishness.  These  experiments  are  being  tried  because  commer- 
cialism failed  to  serve  civilization:  the  cooperator  intrenched  behind 
his  wiser  organization  would  smile  if  you  regarded  him  as  a  patient 
lamb  on  the  altar  of  altruism.  He  knows  that  the  old  economists 
were  bad  psychologists  and  superficial  observers  when  they  described 
man  as  a  slot  machine  set  in  motion  by  inserting  a  coin. 

It  is  often  asserted  that  modern  industry  could  never  have  been 
created  had  it  not  been  given  over  to  untrammeled  exploitation  by 
commercial  adventurers.  That  may  be  true.  There  is  no  great  point 
in  discussing  the  question  as  to  what  might  have  happened  if  some- 
thing else  had  happened  in  the  past.  Modern  industry  was  created 
by  the  profiteer,  and  here  it  is,  the  great  fact  in  our  lives,  blacken- 
ing our  cities,  fed  with  the  lives  of  children,  a  tyrant  over  men  and 
women,  turning  out  enormous  stocks  of  produce,  good,  bad,  and 
horrible.    We  need  waste  no  time  arguing  whether  any  other  motive 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO     331 

could  have  done  the  work.  What  we  are  finding  is  that  however 
effective  profit  may  have  been  for  inaugurating  modern  industry,  it 
is  failing  as  a  method  of  realizing  its  promise.  That  is  why  men 
turned  to  cooperatives  and  labor  unions;  that  is  why  the  state  is 
interfering  more  and  more.  These  blundering  efforts  are  the  asser- 
tion of  all  the  men  and  all  those  elements  of  their  natures  which 
commercialism  has  thwarted.  No  amount  of  argument  can  wipe 
out  the  fact  that  the  profit-system  has  never  commanded  the  whole- 
hearted assent  of  the  people  who  lived  under  it.  There  has  been  a 
continuous  effort  to  overthrow  it.  From  Robert  Owen  to  John  Stuart 
Mill,  from  Ruskin  through  Morris  to  the  varied  radicalism  of  our 
day,  from  the  millionaire  with  his  peace  palaces  to  Henry  Ford  with 
his  generous  profit-sharing,  through  the  consumer  organizing  a  co- 
operative market,  to  the  workingmen  defying  their  masters  and 
the  economists  by  pooling  their  labor,  you  find  a  deep  stream  of  un- 
easiness, of  human  restlessness  against  those  impositions  which  are 
supposed  to  rest  on  the  eternal  principles  of  man's  being.    .    .    . 

The  real  news  about  business,  it  seems  to  me,  is  that  it  is  being 
administered  by  men  who  are  not  profiteers.  The  managers  are 
on  salary,  divorced  from  ownership  and  from  bargaining.  They 
represent  the  revolution  in  business  incentives  at  its  very  heart.  For 
they  conduct  gigantic  enterprises  and  they  stand  outside  the  hig- 
gling of  the  market,  outside  the  shrewdness  and  strategy  of  competi- 
tion. The  motive  of  profit  is  not  their  personal  motive.  That  is 
an  astounding  change.  The  administration  of  the  great  industries 
is  passing  into  the  hands  of  men  who  cannot  halt  before  each  trans- 
action and  ask  themselves:  what  is  my  duty  as  the  Economic  Man 
looking  for  immediate  gain?  They  have  to  live  on  their  salaries, 
and  hope  for  promotion,  but  their  day's  work  is  not  measured  in 
profit.  There  are  thousands  of  these  men,  each  with  responsibilities 
vaster  than  the  patriarchs  of  industry  they  have  supplanted.  It  is 
for  the  commercial  theorists  to  prove  that  the  "ability"  is  inferior 
and  talent  less  available. 

It  is  no  accident  that  the  universities  have  begun  to  create  grad- 
uate schools  of  business-administration.  Fifty  years  ago  industry 
was  an  adventure  or  perhaps  a  family  tradition.  But  to-day  it  is  be- 
coming a  profession  with  university  standing  equal  to  that  of  law, 
medicine,  or  engineering.  The  universities  are  supplying  a  demand. 
It  is  big  business,  I  believe,  which  has  created  that  demand.  For 
it  is  no  longer  possible  to  deal  with  the  present  scale  of  industry 
if  your  only  equipment  is  what  men  used  to  call  "experience,"  that 
is,  a  haphazard  absorption  of  knowledge  through  the  pores.  Just 
as  it  is  no  longer  possible  to  become  a  physician  by  living  with 
doctors,  just  as  law  cannot  be  grasped  by  starting  as  a  clerk  in  some 


332      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

attorney's  office,  so  business  requires  a  greater  preparation  than  a 
man  can  get  by  being  a  bright,  observant,  studious,  ambitious 
office  boy,  who  saves  his  money  and  is  good  to  his  mother. 

What  it  will  mean  to  have  business  administered  by  men  with 
a  professional  training  is  a  rather  difficult  speculation.  That  it  is 
a  very  far-reaching  psychological  change,  I  have  no  doubt.  The  pro- 
fessions bring  with  them  a  fellowship  in  interest,  a  standard  of 
ethics,  an  esprit  de  corps,  and  a  decided  discipline.  They  break 
up  that  sense  of  sullen  privacy  which  made  the  old-fashioned  busi- 
ness man  so  impervious  to  new  facts  and  so  shockingly  ignorant  of 
the  larger  demands  of  civilized  life.  I  know  that  the  professions 
develop  their  pedantry,  but  who  was  ever  more  finicky,  more  rigid 
in  his  thinking  than  the  self-satisfied  merchant?  It  would  be  idle 
to  suppose  that  we  are  going  suddenly  to  develop  a  nation  of  reason- 
able men.  But  at  least  we  are  going  to  have  an  increasing  number 
of  "practical"  men  who  have  come  in  contact  with  the  scientific 
method.  That  is  an  enormous  gain  over  the  older  manufacturers 
and  merchants.  They  were  shrewd,  hard-working,  no  doubt,  but  they 
were  fundamentally  uneducated.  They  had  no  discipline  for  making 
wisdom  out  of  their  experience.  They  had  almost  no  imaginative 
training  to  soften  their  primitive  ambitions.  But  doctors  and  engi- 
neers and  professional  men,  generally,  have  something  more  than  a 
desire  to  accumulate  and  outshine  their  neighbors.  They  have  found 
an  interest  in  the  actual  work  they  are  doing.  The  work  itself  is 
in  a  measure  its  own  reward.  The  instincts  of  workmanship,  of  con- 
trol over  brute  things,  the  desire  for  order,  the  satisfaction  of  services 
rendered  and  uses  created,  the  civilizing  passions  are  given  a  chance 
to  temper  the  primal  desire  to  have  and  to  hold  and  to  conquer. 

Woodrow  Wilson:  Message  to  Congress* 

So  far  as  our  domestic  affairs  are  concerned  the  problem  of  our 
return  to  peace  is  a  problem  of  economic  and  industrial  readjustment. 
That  problem  is  less  serious  for  us  than  it  may  turn  out  to  be  for 
the  nations  which  have  suffered  the  disarrangements  and  the  losses 
of  war  longer  than  we.  Our  people  moreover  do  not  wait  to  be 
coached  and  led.  They  know  their  own  business,  are  quick  and  re- 
sourceful at  every  readjustment,  definite  in  purpose,  and  self-reliant 
in  action.  Any  leading  strings  we  might  seek  to  put  them  in  would 
speedily  become  hopelessly  tangled  because  they  would  pay  no  at- 
tention to  them  and  go  their  own  way.  All  that  we  can  do  as  their 
legislative  and  executive  servants  is  to  mediate  the  process  of  change 

*  Reprinted  from  the  Official  U.  S.  Bulletin,  Committee  on  Public  In- 
formation, Vol.  2,  No.  477,  Dec.  2,  1918. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    333 

here,  there,  and  elsewhere  as  we  may.  I  have  heard  much  counsel 
as  to  the  plans  that  should  be  formed  and  personally  conducted  to 
a  happy  consummation,  but  from  no  quarter  have  I  seen  any  general 
scheme  of  "reconstruction"  emerge  which  I  thought  it  likely  we  could 
force  our  spirited  business  men  and  self-reliant  laborers  to  accept 
with  due  pliancy  and  obedience. 

While  the  war  lasted  we  set  up  many  agencies  by  which  to  direct 
the  industries  of  the  country  in  the  services  it  was  necessary  for 
them  to  render,  by  which  to  make  sure  of  an  abundant  supply  of 
the  materials  needed,  by  which  to  check  undertakings  that  could  for 
the  time  be  dispensed  with  and  stimulate  those  that  were  most  serv- 
iceable in  war,  by  which  to  gain  for  the  purchasing  departments  of 
the  government  a  certain  control  over  the  prices  of  essential  articles 
and  materials,  by  which  to  restrain  trade  with  alien  enemies,  make 
the  most  of  the  available  shipping,  and  systematize  financial  trans- 
actions, both  public  and  private,  so  that  there  would  be  no  unneces- 
sary conflict  or  confusion,  by  which,  in  short,  we  put  every  material 
energy  of  the  country  in  harness  to  draw  the  common  load  and  make 
of  us  one  team  in  the  accomplishment  of  a  great  task.  But  the 
moment  we  knew  the  armistice  to  have  been  signed  we  took  the 
harness  off.  Raw  materials  upon  which  the  government  had  kept 
its  hand  for  fear  there  should  not  be  enough  for  the  industries  that 
supplied  the  armies  have  been  released  and  put  into  the  general 
market  again.  Great  industrial  plants  whose  whole  output  and  ma- 
chinery had  been  taken  over  for  the  uses  of  the  government  have 
been  set  free  to  return  to  the  uses  to  which  they  were  put 
before  the  war.  It  has  not  been  possible  to  remove  so  readily 
or  so  quickly  the  control  of  foodstuffs  and  of  shipping,  because 
the  world  has  still  to  be  fed  from  our  granaries  and  the  ships 
are  still  needed  to  send  supplies  to  our  men  oversea  and  to  bring 
the  men  back  as  fast  as  the  disturbed  conditions  on  the  other  side 
of  the  water  permit;  but  even  there  restraints  are  being  relaxed  as 
much  as  possible  and  more  and  more  as  the  weeks  go  by. 

Never  before  have  there  been  agencies  in  existence  in  this 
country  which  knew  so  much  of  the  field  of  supply,  of  labor,  and  of 
industry  as  the  War  Industries  Board,  the  War  Trade  Board,  the 
Labor  Department,  the  Food  Administration,  and  the  Fuel  Admin- 
istration have  shown  since  their  labors  became  thoroughly  system- 
atized; and  they  have  not  been  isolated  agencies;  they  have  been 
directed  by  men  which  represented  the  permanent  Departments  of 
the  Government  and  so  have  been  the  centers  of  unified  and  co- 
operative action.  It  has  been  the  policy  of  the  Executive,  therefore, 
since  the  armistice  was  assured  (which  is  in  effect  a  complete  sub- 
mission of  the  enemy)  to  put  the  knowledge  of  these  bodies  at  the 


334     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

disposal  of  the  business  men  of  the  country  and  to  offer  their  in- 
telligent mediation  at  every  point  and  in  every  matter  where  it  was 
desired.  It  is  surprising  how  fast  the  process  of  return  to  a  peace 
footing  has  moved  in  the  three  weeks  since  the  fighting  stopped.  It 
promises  to  outrun  any  inquiry  that  may  be  instituted  and  any  aid 
that  may  be  offered.  It  will  not  be  easy  to  direct  it  any  better  than 
it  will  direct  itself.    The  American  business  man  is  of  quick  initiative. 


2.    THE  PARTNERSHIP  OF  CAPITAL  AND  LABOR 

John  D.  Rockefeller,  Jr.:  Industrial  Creed* 

If  the  points  which  I  have  endeavored  to  make  are  sound, 
might  not  the  four  parties  to  industry  subscribe  to  an  Industrial 
Creed  somewhat  as  follows? 

1.  I  believe  that  Labor  and  Capital  are  partners,  not  enemies; 
that  their  interests  are  common,  not  opposed;  and  that  neither  can 
attain  the  fullest  measure  of  prosperity  at  the  expense  of  the 
other,  but  only  in  association  with  the  other. 

2 .  I  believe  that  the  community  is  an  essential  party  to  industry 
and  that  it  should  have  adequate  representation  w^th  the  other 
parties. 

3.  I  believe  that  the  purpose  of  industry  is  quite  as  much  to 
advance  social  well-being  as  material  prosperity;  that,  in  the  pursuit 
of  that  purpose,  the  interests  of  the  community  should  be  carefully 
considered,  the  well-being  of  employees  fully  guarded,  management 
adequately  recognized  and  capital  justly  compensated,  and  that 
failure  in  any  of  these  particulars  means  loss  to  all  four  parties. 

4.  I  believe  that  every  man  is  entitled  to  an  opportunity  to  earn 
a  living,  to  fair  wages,  to  reasonable  hours  of  work  and  proper 
working  conditions,  to  a  decent  home,  to  the  opportunity  to  play, 
to  learn,  to  worship  and  to  love,  as  well  as  to  toil,  and  that  the 
responsibility  rests  as  heavily  upon  industry  as  upon  government 
or  society,  to  see  that  these  conditions  and  opportunities  prevail. 

5.  I  believe  that  diligence,  initiative  and  efficiency,  wherever 
found,  should  be  encouraged  and  adequately  rewarded,  and  that  in- 
dolence, indifference  and  restriction  of  production  should  be  dis- 
countenanced. 

6.  I  believe  that  the  provision  of  adequate  means  of  uncovering 
grievances  and  promptly  adjusting  them,  is  of  fundamental  impor- 
tance to  the  successful  conduct  of  industry. 

7.  I  believe  that  the  most  potent  measure  in  bringing  about  in- 
dustrial harmony  and  propserity  is  adequate  representation  of  the 

*  Reprinted  by  permission  from  an  address  before  the  War  Emergency 
and  Reconstruction  Committee  of  the  Chamber  of  Commerce  of  the 
United  States,  Dec.  5,  1918. 

335 


336      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

parties  in  interest;  that  existing  forms  of  representation  should  be 
carefully  studied  and  availed  of  in  so  far  as  they  may  be  found  to 
have  merit  and  are  adaptable  to  conditions  peculiar  to  the  various 
industries. 

8.  I  believe  that  the  most  effective  structure  of  representation 
is  that  which  is  built  from  the  bottom  up;  which  includes  all  em- 
ployes, which  starts  v/ith  the  election  of  representatives  and  the 
formation  of  joint  committees  in  each  industrial  plant,  proceeds  to 
the  formation  of  joint  district  councils  and  annual  joint  conferences 
in  a  single  industrial  corporation,  and  admits  of  extension  to  all 
corporations  in  the  same  industry,  as  well  as  to  all  industries  in  a 
community,  in  a  nation,  and  in  the  various  nations. 

9.  I  believe  that  the  application  of  right  principles  never  fails 
to  effect  right  relations;  that  "the  letter  killeth  but  the  spirit  giveth 
life";  that  forms  are  w^holly  secondary,  while  attitude  and  spirit  are 
all  important;  and  that  only  as  the  parties  in  industry  are  animated 
by  the  spirit  of  fair  play,  justice  to  all  and  brotherhood,  will  any 
plan  which  they  may  mutually  work  out  succeed. 

ID.  I  believe  that  that  man  renders  the  greatest  social  service 
who  so  co-operates  in  the  organization  of  industry  as  to  afford  to  the 
largest  number  of  men  the  greatest  opportunity  for  self-develop- 
ment and  the  enjoyment  of  those  benefits  which  their  united  efforts 
add  to  the  wealth  of  civilization. 

Stephen  C.  Mason,  President  of  the  National  Associa- 
tion of  31anufacturers:  How  American  Manufac- 
turers View  Employment  Relations  * 

It  is  unfortunate  that  in  all  the  discussion  emanating  from  the 
representatives  of  organized  wage-earners  relating  to  industrial 
standards  after  the  war,  "new  rights  and  advantages"  for  labor  are 
the  principal  and  practically  the  only  topics  upon  which  stress  is 
laid.  Much  has  been  heard  about  the  "better  times"  alleged  to  be 
labor's  proper  reward  by  reason  of  "sacrifices"  which  it  is  announced 
were  made  by  the  organized  groups  during  the  war. 

With  no  desire  to  belittle  the  loyalty  of  the  great  mass  of  the 
workers  of  the  United  States,  without  reference  to  organizations,  it 
seems  the  fact  has  escaped  notice  that  American  labor  cannot  ac- 
tually hope  either  to  attain,  retain  or  maintain  any  existing  or  future 
"new  rights  and  advantages,"  unless  such  privileges  are  truly  con- 
nected with  public  necessity  and  welfare  and  shared  in  by  Amierican 
*  Reprinted  by  permission  from  The  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  Vol.  LXXXII,  No.  171.  Publication  No. 
1278,  March,  1919. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    337 

employers  as  well  as  employes.  No  benefit  or  advantage  can  accrue 
to  the  employe  that  does  not  come  from  a  healthy,  successful  and 
expanding  industry. 

The  overwhelming  majority  of  the  manufacturers  in  this  country 
are  firm  in  their  belief  that  absolutism  on  the  part  of  the  em- 
ploye is  just  as  bad  for  the  general  welfare  of  the  nation  as 
absolutism  on  the  part  of  the  employer.  The  National  Association 
of  Manufacturers  is  confident  that,  left  to  themselves  without  the 
irritations,  exaggerations  and  agitations  of  a  comparatively  small 
group  of  individuals,  the  workers  and  employers  of  the  United  States 
would  readily  find  a  common  and  equitable  basis  on  which  properly 
to  meet  every  present  and  future  need. 

It  is  essential,  however,  in  order  to  provide  a  more  healthful  at- 
mosphere in  the  industrial  world,  and  to  ensure  the  success  of  the 
effort  to  reach  and  maintain  a  common  ground,  that  the  partners  in 
industry — the  wage-earners  and  wage-payers — be  given  the  benefit 
of  constructive,  legitimate  and  impartial  encouragement  from  the 
government,  and  a  healthy,  well-informed  public  opinion. 

Any  organization  which  sets  for  itself  the  task,  or  any  part  of 
the  task,  of  creating  or  sustaining  an  artificial  or  abnormal  economic 
condition  in  American  industry  is  certainly  not  working  for  the  true 
and  proper  interests  of  its  members.  It  is  wasting  its  time,  inviting 
destruction  and  running  directly  counter  to  public  welfare. 

In  America  to-day  we  hold  the  great  responsibility  of  providing 
example  for  the  rest  of  the  world.  Confusions  and  iniquities  which 
have  developed  in  our  American  industries  during  the  hustle  and 
bustle  of  waging  war  on  a  modern  scale  should  be  and  will  be 
eliminated  in  good  time.  We  must  lend  our  every  effort  to  avoid 
bitterness,  acrimony,  calamity-howling  or  whining.  Nothing  is  to 
be  gained  by  either  side,  if  there  are  sides,  through  cultivation  or 
promotion  of  misunderstandings.  We  must  be  mindful  of  public 
tension  and  public  interest  in  approaching  and  working  out  our 
problems  of  industrial  readjustment. 

No  manufacturer  has  or  seeks  to  exercise  any  rights  or  privileges 
which  any  other  American  citizen  may  not  have  or  seek  to  exercise. 
In  readjusting  our  industries  to  a  new  and  proper  basis  for  the  work 
of  reconstruction  and  peace  no  part  of  our  industrial  forces  can  be 
asked  or  expected  to  give  up  "advantages"  to  which  it  is  properly 
or  legitimately  entitled.  The  true  measure  of  so-called  industrial 
advantage,  in  our  opinion,  is  nothing  more  or  less  than  a  question 
of  public  welfare  and  the  national  good.  No  man  or  group  of  men 
has  any  right  to  attempt  to  defend  an  uneconomic  industrial  condi- 
tion when  every  reason  that  brought  about  the  abnormal  condition 
has  been  eliminated. 


338     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

The  National  Association  of  Manufacturers  stands  firmly  for  the 
spirit  of  patriotic  industrial  co-operation  and  good  will  in  the  work- 
ing out  of  readjustment  problems.  In  time  of  our  national  emerg- 
ency, during  the  progress  of  hostilities  in  France,  there  was  born  in 
our  American  industrial  relations  the  more  general  realization  that 
co-operation  between  employers  and  employes  was  a  patriotic  duty 
and  a  privilege,  for  the  nation's  safety  and  prosperity,  as  well  as  a 
good  business  policy.  Distinctly  recognizing  this  important  fact, 
the  organized  employers  of  the  United  States  have  long  since  been 
urging,  favoring  and  pledging  that  spirit  of  common  interest  in  our 
industrial  affairs  which  the  war  fostered  so  greatly  among  all  citizens 
concerning  national  duty. 

The  National  Association  of  Manufacturers,  as  a  body,  repre- 
sents practically  every  important  industry  in  the  United  States.  Its 
membership  of  more  than  4,000  is  found  in  every  state,  and  its 
activities,  since  its  inception  at  Cincinnati,  Ohio,  in  1895,  have  been 
directly  connected  with  the  vital  industrial  affairs  of  the  nation. 
Manufacturers  within  its  ranks  have  contributed  very  largely  to  the 
remarkable  progress  of  America,  during  which  the  gross  value  of 
the  industrial  output  of  the  entire  country,  as  measured  by  census 
reports,  has  risen  from  one  billion  dollars  in  1850  to  eleven  billions 
in  1899,  twenty-four  billions  in  19 14  (the  last  normal  year)  and, 
considering  the  very  rapid  rise  in  monetary  values  during  the  past 
four  years,  may  be  estimated  to  have  doubled  the  last  amount  in 
1918.  Several  years  ago  the  annual  output  of  the  manufacturing 
industries  of  the  United  States  began  to  exceed  in  money  value  the 
combined  annual  output  of  any  other  two  nations  of  the  earth;  and 
the  factory  production  of  the  members  of  the  National  Association 
of  Manufacturers,  alone,  began  to  exceed  the  value  of  the  total 
annual  production  of  any  single  foreign  nation. 

As  the  president  of  the  Association,  therefore,  I  consider  it  not 
only  a  privilege  but  a  duty  to  give,  as  briefly  as  possible,  an  accurate 
account  of  the  nature,  scope  and  purposes  of  an  organization  which 
has  grown  to  be  the  largest  national  association  in  the  world 
whose  active  membership  is  wholly  made  up  of  manufacturing  es- 
tablishments representing  every  phase  of  industry.  A  clearer  under- 
standing and  wider  appreciation  of  the  spirit  of  the  organization,  of 
the  American  manufacturer's  attitude,  and  the  principles  animating 
the  work  of  the  National  Association  of  Manufacturers,  may  be  had 
by  considering  and  interpreting  separately  its  Declaration  of  Labor 
Principles. 

(i)  Fair  dealing  is  the  fundamental  and  basic  principle  on 
which  relations  between  employes  and  employers  should  rest. 

In  this  statement  we  have  put  tersely  our  firm  belief  that  fair 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    339 

dealing  in  industrial  relations  is  not  merely  incumbent  upon  those 
who  work  for  hire  but  just  as  much,  if  not  even  more,  upon  those  who, 
in  their  capacity  as  employers,  manage  and  direct  industrial  enter- 
prises and  supervise  the  collective  or  individual  labors  of  others. 
We  consider  such  a  policy  "good  business." 

This  organization  has  intensively  and  unselfishly  fostered  and 
promoted  in  every  practical  manner  the  doctrine  that  every  employer 
should  do  everything  in  his  power  to  cultivate  and  maintain  a  feeling 
and  condition  of  human  friendliness  and  brotherhood  with  his  em- 
ployes. An  employer  who  does  not,  has  poor  business  vision  and  is 
an  undesirable  citizen.  It  has  always  been  a  puzzle  to  employers 
at  what  stage  of  the  industrial  activity  they  and  their  employes  cease 
to  be  co-operators. 

It  is  a  fact  that  the  larger  proportion  of  the  most  successful  em- 
ployers in  this  country  are  men  who  have  seriously  undertaken  to 
restore  or  maintain  conditions  of  friendliness  and  co-operative  good 
will  in  their  relations  towards  their  employes.  Many  obstacles  to 
such  efforts  on  the  part  of  employers  have  been  deliberately  fostered 
by  influences  outside  their  individual  plants,  by  those  who,  while 
harping  on  the  word  "exploitation,"  have  themselves  actually  and 
most  seriously  "exploited"  the  employes. 

Fair  dealing  on  the  part  of  employers  toward  their  employes  has 
been  demonstrated  on  more  numerous  occasions  than  fair  dealing 
by  employes  who  have  blindly  followed  the  orders  of  certain  old- 
time  masters  of  the  self-profiting  art  of  misleading  labor.  In  this 
respect  much  remains  to  be  done  in  order  to  clarify  the  industrial 
atmosphere  and  prevent  the  bickerings,  strife  and  misunderstandings 
engendered  by  such  labor  misleaders  and  sowers  of  destructive  class 
hatred  and  discontent. 

Every  legitimate  and  constructive  resource  at  the  command  of 
the  National  Association  of  Manufacturers  has  in  the  past  and  will 
continue  in  the  future  to  be  devoted  to  fair  dealings  by  employers. 
We  feel  that,  outside  of  the  everyday  practical  application  of  the 
Golden  Rule  to  industrial  relations,  it  is  essential  that  all  proper 
means  of  education  should  be  fostered  and  encouraged.  This  latter 
need  has  already  been  at  least  partially  filled  by  the  nation-wide 
educational  work  inaugurated  and  carried  on  by  the  Association 
since  the  early  part  of  19 16.  In  this  campaign  we  made  a  somewhat 
successful  effort  to  re-focus  the  industrial  perspective  of  the  Ameri- 
can people  and  give  to  all  classes  of  citizens  a  better  understanding 
of  their  responsibilities  to  our  industries  and  of  the  actual  bearing 
which  industrial  prosperity  has  on  the  public  welfare. 

Through  a  carefully  selected  staff  of  public  speakers,  writers, 
various  forms  of  printed  literature,  stereopticon  slides  and  moving 


340     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

picture  films,  we  have  spread  broadcast  the  constructive  gospel  of 
industrial  co-operation.  The  results  achieved  have  been  visible  al- 
ready in  the  recent  more  general  awakening  of  political  leaders, 
economists,  leading  employers  and  bankers,  as  well  as  among  various 
craft  and  trade  organizations,  to  the  need  for  preaching  and  practis- 
ing co-operative  relations  between  the  employer  and  the  employe. 

The  work  described  has  been  performed  by  the  National  As- 
sociation of  Manufacturers  because  there  seemed  to  be  a  general 
public  misconception  of  industrial  problems,  needs  and  conditions 
which  had  greatly  contributed  toward  industrial  inefficiency  and  the 
creation  of  unrest  and  strife.  It  has  been  carried  on  free  of  any  tinge 
of  prejudice  or  controversial  effort,  simply  as  a  constructive  educa- 
tional campaign  to  make  possible  the  greater  realization  of  that 
spirit  of  fair  dealing  enunciated  in  the  first  article  of  the  Associa- 
tion's Declaration  of  Labor  Principles. 

(2)  The  National  Association  of  Manufacturers  is  not  opposed 
to  organizations  of  labor  as  such,  but  it  is  unalterably  opposed  to 
boycotts,  blacklists  and  other  illegal  acts  of  interference  with  the 
personal  liberty  of  employer  or  employe. 

From  its  organization  this  Association  has  never  denied  nor 
condemned  the  right  to  existence  of  labor  unions.  It  has,  however, 
insistently  demanded  that  labor  organizations  be  founded  upon  an 
enlightened  public  consciousness,  and  their  operations  based  upon 
legitimate  principles,  and  that  they  recognize  the  right  of  all  workers 
to  engage  for  their  services  under  such  lawful  conditions  as  may 
seem  best  to  them.  Such  organizations  should  establish  responsi- 
bility for  their  contracts.  Power  without  responsibility  always  leads 
to  abuse.  There  can  be  little  room  for  doubt  that  the  general  disuse 
into  which  such  labor  union  tactics  as  boycotts  and  blacklists  have 
happily  fallen  in  recent  years  has  proved  not  only  their  illegal  nature 
(as  numerous  court  decisions  proclaim)  but  the  emphatic  disfavor 
of  the  general  public  regarding  such  practices. 

"Cruel,"  "cowardly,"  "immoral"  and  "anti-social,"  are  some  of 
the  judicial  characterizations  of  the  un-American  labor  union 
weapon,  the  boycott.  The  pernicious  nature  of  both  this  practice 
and  that  of  labor  union  blacklists  is  that  they  are  serious  invasions 
of  the  rights  and  personal  liberties  not  only  of  the  employer  and 
employe,  parties  to  a  dispute,  but  inflict  injury  on  third  persons 
who  are  not  interested  parties  in  the  controversy.  We  equally  con- 
demn any  such  practices  on  the  part  of  employers.  Against  such 
oppressive  illegal  acts  the  Association  has  stood  and  always  will  stand 
firm. 

(3)  No  person  should  be  refused  emplo3^ment  or  in  any  way 
discriminated  against  on  account  of  membership  or  non-membership 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    341 

in  any  labor  organization,  and  there  should  be  no  discriminating 
against  or  interference  with  any  employe  who  is  not  a  member  of 
a  labor  organization  by  members  of  such  organizations. 

This  declaration  embraces  the  fundamental  principle  that  every 
person  who  labors  must  have  the  freedom  to  engage  for  and  deliver 
his  or  her  services  without  interference;  conversely,  every  employer 
of  labor  must  have  the  freedom  to  hire  the  class,  grade,  quantity  and 
quality  of  labor  best  suited  to  his  needs.  This  is  the  definition  of 
the  important  industrial  principle  of  the  ''Open  Shop."  It  is  a 
principle  that  should  neither  be  denied  nor  compromised  in  the  in- 
terest of  either  employers  or  employes,  and  is  a  sound  doctrine  inter- 
woven with  certain  inherent,  individual,  human  rights.  An  analysis 
of  this  tenet  shows  it  to  be  neither  offensive  nor  destructive.  On  the 
contrary  it  is  a  safeguard  of  a  sacred  individual  human  right  whether 
it  is  industrial  in  application  and  exercise,  or  otherwise.  It  is  a 
concept  upon  which  our  constitution  and  political  institutions  are 
based. 

(4)  With  due  regard  to  contracts,  it  is  the  right  of  the  employe 
to  leave  his  employment  whenever  he  sees  fit,  and  it  is  the  right  of 
the  employer  to  discharge  any  employe  when  he  sees  fit. 

This  declaration  is  based  upon  the  vested  individual  rights  of 
employe  and  em_ployer.  No  one  questions  the  right  of  any  em- 
ploye to  terminate  his  employment  when  he  desires  to  do  so,  but 
this  does  not  carry  with  it  the  right  to  conspire  with  or  influence 
fellow  workers  to  quit  simultaneously  with  him,  to  the  injury  or 
interference  wuth  their  employer's  business,  or  to  undertake  to  pre- 
vent anyone  from  taking  the  position  he  has  left. 

On  the  other  hand,  it  must  be  recognized  that  the  employer 
has  absolute  freedom  in  the  selection  of  employes  that  he  considers 
will  be  satisfactory  and  efficient  for  the  services  required  with  com- 
pensation for  such  service  at  the  prevailing  rates  of  wages,  and  the 
right  to  dispense  with  such  services  whenever  he  desires  to  do  so. 

(5)  Employers  must  be  free  to  employ  their  work  people  at 
wages  mutually  satisfactory,  without  interference  or  dictation  on  the 
part  of  individuals  or  organizations  not  directly  parties  to  such  con- 
tracts. 

Personal  and  legally  recognized  property  rights  vested  in  the 
builders,  managers  and  owners  of  industrial  enterprises,  are  in- 
volved in  this  article  of  faith.  Old  established  common  law  rights  of 
individuals  to  enter  into  such  proper  contracts  as  may  seem  best 
to  each  party  thereto  without  interference  on  the  part  of  third  or 
outside  persons  are  simply  defended  by  this  principle.  It  contains 
the  timely  sentiment  that  individual  initiative  and  the  institution  of 
private  property  is  something  worth  making  the  greatest  sacrifices  to 


342      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

preserve.  No  effort  is  made  to  infringe  upon  any  vested  or  recog- 
nized rights  or  privileges  of  employes  in  such  a  doctrine.  Indeed, 
by  stoutly  asserting  the  specific  rights  of  employers,  as  such,  an 
indirect  service  is  done  to  workers  and  an  acknowledgment  made  of 
the  fact  that  our  industrial  elements  have  certain  clearly  defined 
limitations  in  their  relations  with  each  other.  No  one  is  more 
vitally  concerned  in  the  right  of  individual  contract  than  the  worker. 
This  right  was  denied  in  old  English  statutes  and  common  law  and 
the  securing  and  establishment  of  this  right  was  one  of  the  first 
steps  toward  emancipation  of  the  employed. 

(6)  Employers  must  be  unmolested  and  unhampered  in  the 
management  of  their  business,  in  determining  the  amount  and 
quality  of  their  product,  and  in  the  use  of  any  methods  or  systems 
of  pay  which  are  just  and  equitable. 

Herein  is  enunciated  the  fundamental  condition  of  the  successful 
conduct  of  business  that  the  owners  and  managers  of  manufacturing 
establishments  must  be  protected  in  their  right  to  operate  their 
plants  without  outside  interference,  according  to  the  natural  and 
legally  defined  regulations  of  commerce.  The  principle  demands 
free  exercise  of  individual  business  judgment  and  initiative,  without 
which  there  would  be  little,  if  any,  incentive  to  engage  in  business  en- 
terprise, and  indirectly  insists  upon  a  recognition  that  the  principles 
of  management  are  primarily  and  distinctively  within  the  province  of 
plant  owners  and  operators,  and  the  intervention  of  outside,  unin- 
formed individuals  or  organizations  is  neither  desirable  nor  proper  in 
theory  or  practice.  As  the  success  and  expansion  of  business  depend 
primarily  on  management,  it  clearly  follows  that  you  cannot  hamper 
management  without  injuring  industry. 

(7)  In  the  interest  of  employes  and  employers  of  the  country 
no  Umitation  should  be  placed  upon  the  opportunities  of  any  person 
to  learn  any  trade  to  which  he  or  she  may  be  adapted. 

Unrestricted  opportunity  for  industrial  education  of  the  youth 
of  the  land  so  that  there  may  be  produced  efficient  industrial  work- 
ers is  the  underlying  thought  involved  in  this  statement.  It  implies 
a  complete  rejection  of  the  erroneous  and  harmful  principle  of  trade 
unions  by  which  limitations  are  placed  upon  the  number  of  appren- 
tices permitted  to  be  employed  in  the  skilled  trades.  In  recent 
years  there  has  been  a  widespread  awakening  of  public  interest  in 
the  subject  of  vocational  training.  Municipal,  state  and  even  the 
Federal  Government,  realizing  the  dire  necessity  for  the  more  general 
systematic  industrial  training  of  our  youth,  have  undertaken  exten- 
sive plans  in  this  direction.  For  more  than  twenty  years  the  em- 
ployers of  the  country  embraced  in  the  ranks  of  the  association 
have  not  only  recognized  the  urgency  of  this  problem,  but  have 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    343 

onsistently  made  every  possible  effort  to  increase  the  opportunities 
)f  any  person  to  learn  any  trade  to  which  he  or  she  may  be  adapted. 
The  widespread  recognition  of  this  question  during  recent  years  is 
m  indication  of  the  soundness  of  the  position  taken  by  the  Associa- 
ion  upon  this  question. 

(8)  The  National  Association  of  Manufacturers  disapproves 
absolutely  be  put  aside  and  each  be  content,  the  worker  to  engage 
)f  all  conditions  between  employers  and  employes  by  any  amicable 
nethod  that  will  preserve  the  rights  of  both  parties. 

This  portion  of  our  principles  we  honestly  regard  as  a  long  stand- 
ing monument  to  the  American  employer's  recognition  of  the  need 
and  value  of  the  maintenance  of  industrial  peace.  It  will  be  noted 
that  no  specific  recommendation  as  to  a  means  to  this  end  is  con- 
tained in  the  principle.  This  in  itself  is  an  absolute  refutation  of 
the  charge  that  employers  have  generally  favored  any  iron-clad  form 
of  industrial  armistice.  Furthermore,  no  reference  is  here  made  to 
any  special  views  which  the  employer  may  entertain  as  to  various 
forms  of  industrial  arbitration  and  conciliation  which  have  been  tried 
and  in  many  instances  found  wanting. 

The  attitude  of  the  organized  employers  of  the  nation  in  dis- 
approving emphatically  of  the  strike,  which  is  commonly  regarded 
as  labor's  chief  weapon  of  offense  as  well  as  defense,  has  been  no  less 
emphatic  with  respect  to  disapproval  of  the  lockout  which  has  been 
regarded  an  offensive  and  defensive  weapon  of  employers.  Con- 
cretely put,  it  is  the  feeling  of  the  members  of  the  Association  that 
the  compHcated  question  of  wages  and  related  industrial  problems,  in 
the  interest  of  industrial  development,  must  be  met  with  the  utmost 
fairness  of  which  human  intelligence  is  capable.  The  belief  is  now 
more  general  than  ever  among  the  employers  of  America  that  the 
old-time  selfishness  of  both  the  employer  and  the  employe  must 
absolutely  be  put  aside  and  each  be  content,  the  worker  to  engage 
for  his  labor  at  a  reasonably  proper  wage  and  the  employer  to  hire 
labor  on  the  same  equitable  basis. 

Going  one  step  further,  it  is  our  firm  belief  that  a  more  common 
recognition  of  the  actual  partnership  relation  and  joint  responsibility 
which  exists  between  the  man  who  pays  a  wage  and  the  man  who 
receives  a  wage,  would  be  the  greatest  single  contribution  to  the 
cause  of  industrial  peace  and  prosperity  that  is  capable  of  achieve- 
ment. 

(9)  Employes  have  the  right  to  contract  for  their  sevices  in  a 
collective  capacity,  but  any  contract  that  contains  a  stipulation  that 
employment  should  be  denied  to  men  not  parties  to  the  contract,  is 
an  evasion  of  the  constitutional  rights  of  the  American  workman,  and 
is  against  public  policy  and  in  violation  of  the  conspiracy  law.    This 


344     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

Association  declares  its  unalterable  antagonism  to  the  closed  shop, 
and  insists  that  the  doors  of  no  industry  be  closed  against  American 
workmen  because  of  their  membership  or  non-membership  in  any 
labor  organization. 

The  evident  purpose  of  such  a  declaration  as  this  is  the  affirma- 
tion of  the  sacred  and  unassailable  constitutional  right  of  every 
worker  and  of  every  person  to  engage  for  his  labor  in  a  free  and 
unrestricted  market.  Despite  the  efforts  of  many  to  garble  and 
destroy  this  vital  industrial  truth,  it  is  unquestionable  that  the 
prosperity  of  this  country  depends  upon  strict  adherence  to  this 
fundamental  rule  of  liberty  and  justice.  The  employers  of  Amer- 
ica regard  this  principle  as  something  that  cannot,  in  the  interests 
of  free  institutions,  be  abridged  by  legislation.  In  other  words,  we 
insist  that  no  man  or  group  of  men,  whether  employers  or  employes, 
has  any  right  to  place  a  brand  upon  any  human  being  and  say  that 
those  so  branded,  regardless  of  merit,  are  entitled  to  special  priv- 
ileges, and  in  the  same  breath  to  say  that  those  who  are  not  so 
branded  and  not  willing  to  be  so  branded  must  be  limited  in  or 
prevented  from  the  full  exercise  of  their  constitutional  rights. 

It  may  be  timely  to  record  the  fact  that  the  question  of  collec- 
tive, shop  bargaining,  or  cooperative  representation  already  has 
had  earnest  consideration  by  a  large  number  of  manufacturers 
throughout  the  country,  and  practical  and  successful  plans  embody- 
ing such  purposes  are  already  in  operation  in  many  important  es- 
tablishments. In  the  adoption  of  these  industrial  representation 
plans  no  question  is  raised  regarding  the  membership  of  workers 
in  outside  organizations. 

These  plans  present  a  method  by  which  employes  can  deal  col- 
lectively, through  representatives  selected  or  elected  by  them,  with 
their  employers  in  relation  to  all  questions  and  conditions  of  employ- 
ment. They  will  furnish  a  new  channel  of  communication  between 
wage-earners  and  wage-payers  whereby  they  may  better  be  able  to 
avoid  misunderstandings  and  mutually  agree  upon  satisfactory  ad- 
justments of  wages,  working  conditions,  etc.,  and  promote  and  es- 
tablish such  friendly  relationships  and  cooperative  spirit  as  will  be 
beneficial  and  to  the  best  interests  of  both.  Such  activities  are 
clearly  within  the  scope  of  this  principle  of  our  organization. 

(id)  The  National  Association  of  Manufacturers  pledges  it- 
self to  oppose  any  and  all  legislation  not  in  accord  with  the  fore- 
going declaration. 

This  principle,  the  last  of  the  ten  embodied  in  the  Association's 
declarations,  is  nothing  more  than  a  pledge  that  we  will  use  all  proper 
and  legitimate  effort  to  prevent  the  passage  of  laws  designed  by 
self-seeking  interests,  to  contravene,  infringe  upon,  or  take  away 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    345 

from  the  human  elements  engaged  in  our  manufacturing  industries 
the  sacred  and  inherent  rights  and  privileges  involved  in  any  and 
all  of  the  nine  preceding  declarations  of  principles.  A  careful  analy- 
sis of  the  position  enunciated  in  these  principles  we  beUeve  will 
convince  any  unprejudiced  mind  that  they  are  unassailable  and 
might  well  be  adopted  throughout  the  United  States,  as  a  sound 
basis  for  the  conduct  and  guidance  of  American  industrial  relations, 
in  meeting  and  solving  the  many  existing  problems  of  readjustment. 
The  spirit  of  the  chartered  purpose  of  the  Association  is  best 
interpreted  in  the  one  word,  "service";  service  first  to  our  country; 
second,  service  to  our  fellow  men,  both  the  toilers  in  the  humblest 
trades  and  men  of  genius  charged  with  vast  industrial  responsibili- 
ties; lastly,  ser\dce  to  the  perpetuation  of  America's  magnificent 
manufacturing  structure. 

Judge  E.  H,  Gary:  Address  at  Trinity  College, 
Hartford,  Conn.,  June  23,  1919  * 

Many  of  the  wage  earners  have  heretofore  become  property 
owners,  owning  the  houses  in  which,  with  their  families,  they  reside. 
Some  are  the  holders  of  interest-bearing  securities.  The  number  of 
this  character  of  investors  is  increasing.  They  have  as  keen  a  de- 
sire to  see  the  institutions  of  this  country  protected  as  those  who 
have  greater  riches,  and  they  may  be  relied  upon  to  lend  their  influ- 
ence and  their  votes  in  favor  of  the  protection  of  property  and  per- 
son. Opportunity  must  be  given  to  the  workmen  to  increase  their 
pecuniary  holdings  so  far  as  practicable.  To  this  end  I  believe  the 
employers  will  do  their  part. 

W.  I.  King:  Wealth  and  Income  of  the  People  of  the 
United  States  i  pp.  61-2) 

The  only  possible  excuses,  then,  for  allowing  the  great  money- 
getter  to  retain  his  vast  gains  are  that  society  is  too  lethargic  to 
make  the  necessary  effort  to  deprive  the  holder  of  his  money  or 
that,  in  some  way,  society  will  be  benefited  by  allowing  the  fortune 
to  remain  in  his  hands.  The  defender  of  the  millionaire,  of  course, 
bases  his  arguments  upon  the  latter  contention.  We  are  all  fa- 
miliar with  the  reasons  cited  centuries  ago  for  the  maintenance  of  a 
leisure  class — the  desirability  of  fostering  art,  culture,  etc.     These 

*  Reprinted   by  permission   from  The   Iron  Age,  N.  Y.,  June  26,  igig, 
page   1727. 

t  Copyright,  The  Macmillan  Company.     Reprmted  by  permission. 


346      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

are  now  so  much  more  widely  diffused  than  in  the  older  days  that 
arguments  of  this  nature  have  lost  most  of  their  force.  About  the 
only  serious  reason  that  can  now  be  advanced  in  favor  of  wealth 
concentration  is  that  it  is  necessary  in  order  to  secure  a  maximum 
national  dividend — that  exceptional  rewards  to  the  captains  of  in- 
dustry result  in  exceptionally  efficient  production,  thus  increasing 
greatly  the  incomes  of  the  people  as  a  whole.  This  belief  is  not 
necessarily  based  on  the  untenable  hypothesis  that  enormous  re- 
wards are  necessary  in  order  to  secure  the  requisite  degree  of  exer- 
tion and  endeavor  but  rather  it  is  contended  that,  if  there  were  no 
millionaires,  modern  large-scale  industry  would  hardly  be  possible — 
that  corporations  without  leading  stockholders  in  control  would,  at 
best,  be  weak,  vacillating,  and  inefficient,  and  that  the  fifty  millions 
which  we  permit  the  industrial  captain  to  accumulate  have  been  the 
price  of  an  added  production  of  one  hundred  million  or  two  hundred 
million  dollars'  worth  of  goods  which  society  would  never  have  pos- 
sessed had  not  the  efficient  control  been  paid  for  at  a  tremendous 
price.  This  is  not  the  same  as  saying  that  we  must  pay  the  great 
organizer  so  exorbitantly  for  his  efforts.  It  merely  presupposes  a 
necessity  for  a  great  accumulation  of  funds  in  the  hands  of  one  man 
in  order  to  attain  maximum  productivity.  The  great  entrepreneur 
is  made  a  trustee  for  society. 


United  States  Chamber  of  Commerce:  Principles  of 
Industrial  Relations  * 

For  several  years  the  National  Chamber  has  had  committees 
studying  questions  on  industrial  relations.  The  latest  committee 
was  appointed  last  December  and  having  advantage  of  the  study 
over  discoveries  of  earlier  committees,  it  has  formulated  a  statement 
of  several  principles  to  be  followed  in  the  United  States. 

The  members  of  the  committee  signing  the  report  are:  Harry  A. 
Wheeler,  Chairman;  Henry  Bruere,  Vice-President  American  Metal 
Company,  New  York;  William  Butterworth,  President,  Deere  & 
Company,  Moline,  111.;  Joseph  H.  Defrees,  of  Chicago;  Henry  P. 
Kendall,  of  Boston,  and  John  W.  O'Leary,  Vice-President  and 
Treasurer,  Arthur  J.  O'Leary  &  Son,  Chicago.f 

*  Reprinted  by  permission  of  The  Nation's  Business,  April,  1919,  pub- 
lished by  the  United  States  Chamber  of  Commerce. 

t  These  principles,  upon  being  submitted  to  the  iioo  commercial  and 
trade  organizations  in  the  Chamber's  membership  were  indorsed  by  the 
necessary  two-thirds  vote,  with  the  exception  of  No.  XIII,  which  was 
indorsed  by  only  a  majority  vote. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    347 


Industrial  enterprise,  as  a  source  of  livelihood  for  both  employer 
md  employee,  should  be  so  conducted  that  due  consideration  is  given 
:o  the  situation  of  all  persons  dependent  upon  it. 

II 

The  public  interest  requires  adjustment  of  industrial  relations  by 
Deaceful  methods. 

Ill 

Regularity  and  continuity  of  employment  should  be  sought  to  the 
fullest  extent  possible  and  constitute  a  responsibility  resting  alike 
ipon  employers,  wage  earners  and  the  public. 

IV 

The  right  of  workers  to  organize  is  as  clearly  recognized  as  that 
oi  any  other  class  or  part  of  the  community. 

V 

Industrial  harmony  and  prosperity  will  be  most  effectually  pro- 
moted by  adequate  representation  of  the  parties  in  interest.  Existing 
forms  of  representation  should  be  carefully  studied  and  availed  of 
in  so  far  as  they  may  be  found  to  have  merit  and  are  adaptable  to  the 
peculiar  conditions  in  the  various  industries. 

VI 

Whenever  agreements  are  made  with  respect  to  industrial  rela- 
tions, they  should  be  faithfully  observed. 

VII 

Such  agreements  should  contain  provision  for  prompt  and  final 
interpretation  in  the  event  of  controversy  regarding  meaning  or 
application. 

VIII 

Wages  should  be  adjusted  with  due  regard  to  the  purchasing 
power  of  the  wage,  and  to  the  right  of  every  man  to  earn  a  living  at 
fair  wages,  to  reasonable  hours  of  work  and  working  conditions,  to 
a,  decent  home,  and  to  the  enjoyment  of  proper  social  conditions. 

IX 

Fixing  of  a  basic  day  as  a  device  for  increasing  compensation  is 
I  subterfuge  that  should  be  condemned. 


\ 


348     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 


Efficient  production  in  conjunction  with  adequate  wages  is  essen- 
tial to  successful  industry.  Arbitrary  restriction  on  output  below 
reasonable  standards  is  harmful  to  the  interests  of  wage  earners, 
employers,  and  the  public  and  should  not  be  permitted.  Industry, 
efficiency  and  initiative,  wherever  found,  should  be  encouraged  and 
adequately  rewarded,  while  indolence  and  indifiference  should  be 
condemned. 

XI 

Consideration  of  reduction  in  wages  should  not  be  reached  until 
possibility  of  reduction  of  costs  in  all  other  directions  has  been  ex- 
hausted. 

XII 

Administration  of  employment  and  management  of  labor  should 
be  recognized  as  a  distinct  and  important  function  of  management 
and  accorded  its  proper  responsibility  in  administration  organization. 

XIII 

A  system  of  national  employment  offices,  with  due  provision  for 
cooperation  with  existing  state  and  municipal  systems,  can  be  made, 
under  efficient  management  and  if  conducted  with  due  regard  to  the 
equal  interests  of  employers  and  employees  in  its  proper  administra- 
tion, a  most  helpful  agency,  but  only  if  all  appointments  are  made 
strictly  subject  to  the  Civil  Service  Law  and  Rules.  Policies  gov- 
erning the  conduct  of  a  national  system  of  employment  offices  should 
be  determined  in  conjunction  with  advisory  boards, — national,  state 
and  local, — equally  representative  of  employers  and  employees. 

Otto  H,  Kahn:  Individualism  *  (Address  before  Amer- 
ican Bankers  Convention,  1918) 

The  individualism  to  which  I  adhere  spells  neither  reaction  nor 
greed,  selfishness,  class  feeling  or  callousness.  No  less  than  those 
who  carry  their  heart,  visibly  aching  for  the  people  and  aflame 
against  their  oppressors,  into  magazine  articles,  political  assemblies, 
and  upon  lecture  platforms;  no  less  than  those  who  in  the  fervor 
of  their  world-improving  pursuit  discover  cure-alls  for  the  ills  of 
humanity  which  they  fondly  believe  new  and  unfailing  remedies, 
but  which,  as  a  matter  of  fact,  this  old  globe  of  ours  at  one  time  or 

*  Reprinted  by  permission  from  Supplement  of  Commercial  and  Fi- 
nancial Chronicle,  Oct.  lo,  1918.  Published  by  William  B.  Dana  Co., 
New  York. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    349 

another,  in  one  of  its  parts  or  another,  has  seen  tried  and  discarded, 
after  sad  disillusionment — no  less  than  they  are  we  desirous  for  the 
well-being  and  contentment  of  the  masses  of  the  people  and  sym- 
pathetic toward  and  responsive  to  their  aspirations.  .  .  . 

I  suppose  most  of  us  when  we  were  twenty  knew  of  a  short-cut 
to  the  millennium  and  were  impatient,  resentful,  and  rather  contemp- 
tuous of  those  whose  fossilized  prejudices  or  selfishness,  as  we  re- 
garded them,  prevented  that  short-cut  from  becoming  the  high  road 
of  humanity.  Now  that  we  are  older,  though  we  know  that  our 
eyes  will  not  behold  the  millennium,  we  should  still  like  the  nearest 
possible  approach  to  it;  but  we  have  learned  that  no  short-cut  leads 
there,  and  that  anybody  who  claims  to  have  found  one  is  either  an 
impostor  or  self-conceived.  We  have  seen  into  what  an  abyss  of 
despair  and  disgrace  and  suffering  the  self-constituted,  fanatical  or 
corrupt  guides  to  the  millennium  have  plunged  the  people  of  Russia 
who  followed  them  confidingly. 

Individualism  frankly  denies  that  the  world  can  be  run  on  a 
theory  which  presupposes  the  existence  of  mental,  moral,  and  physi- 
cal equality  between  men.  Equality  before  the  law,  equality  of 
political  rights — yes,  equality  of  opportunity,  as  far  as  humanly 
possible — yes.  But  an  inscrutable  Providence  has  bestowed  upon 
His  creatures,  animate  as  well  as  inanimate,  inequality  of  natural 
endowment,  and  from  that  springs,  and  must  necessarily  spring, 
inequality  of  results.  Abstract  justice  is  not  the  eternal  scheme  of 
things.  Why  do  some  trees  grow  straight  and  magnificent,  and 
others  wither  or  are  stunted?  Why  are  some  people  born  with 
vigorous  constitutions  or  with  conspicuous  talents  and  others  not? 
Why  is  Caruso  gifted  with  a  voice  which  enables  him  to  make  as 
much  money  in  one  evening  as  the  average  artist  gets  for  a  year's 
work?  Why  do  people  willingly  pay  $10,000  or  more  to  have  a 
portrait  painted  by  Sargent,  when  Tom  Smith  would  gladly  accept 
$100  for  making  the  picture?  Why  are  some  people  endowed  with 
the  privilege  of  understanding  and  appreciating  art  and  deriving  a 
wealth  of  joy,  recreation  and  inspiration  from  it — a  privilege  which 
I  personally  would  not  exchange  for  any  amount  of  money — and 
many  others  not? 


3.     RISING  TO  THE  TOP 

Woodrow  Wilson:  The  New  Freedom  *  (pp.  15,  167-9, 

270) 

American  industry  is  not  free,  as  once  it  was  free;  American 
enterprise  is  not  free;  the  man  with  only  a  little  capital  is  finding  it 
harder  to  get  into  the  field,  more  and  more  impossible  to  compete 
with  the  big  fellow.  Why?  Because  the  laws  of  this  country  do 
not  prevent  the  strong  from  crushing  the  weak.  That  is  the  reason, 
and  because  the  strong  have  crushed  the  weak  the  strong  dominate 
the  industry  and  the  economic  life  of  this  country.  No  man  can 
deny  that  the  lines  of  endeavor  have  more  and  more  narrowed  and 
stiffened;  no  man  who  knows  anything  about  the  development  of 
industry  in  this  country  can  have  failed  to  observe  that  the  larger 
kinds  of  credit  are  more  and  more  difficult  to  obtain,  unless  you 
obtain  them  upon  the  terms  of  uniting  your  efforts  with  those  who 
already  control  the  industries  of  the  country;  and  nobody  can  fail 
to  observe  that  any  man  who  tries  to  set  himself  up  in  competition 
with  any  process  of  manufacture  which  has  been  taken  under  the 
control  of  large  combinations  of  capital  will  presently  find  himself 
either  squeezed  out  or  obliged  to  sell  and  allow  himself  to  be  ab- 
sorbed. .  .  . 

What  this  country  needs  above  everything  else  is  a  body  of  laws 
which  will  look  after  the  men  who  are  on  the  make  rather  than  the 
men  who  are  already  made.  Because  the  men  who  are  already  made 
are  not  going  to  live  indefinitely,  and  they  are  not  always  kind 
enough  to  leave  sons  as  able  and  as  honest  as  they  are.  .  .  . 

For  my  part,  I  want  the  pigmy  to  have  a  chance  to  come  out. 
And  I  foresee  a  time  when  the  pigmies  will  be  so  much  more  ath- 
letic, so  much  more  astute,  so  much  more  active,  than  the  giants, 
that  it  will  be  a  case  of  Jack  the  giant-killer.  Just  let  some  of  the 
youngsters  I  know  have  a  chance  and  they'll  give  these  gentlemen 
points.  Lend  them  a  little  money.  They  can't  get  any  now.  See 
to  it  that  when  they  have  got  a  local  market  they  can't  be  squeezed 
out  of  it.    Give  them  a  chance  to  capture  that  market  and  then  see 

*  Copyright,  1913,  by  Doubleday,  Page  &  Co.  All  rights  reserved,  in- 
cluding that  of  translation  into  foreign  languages,  including  the  Scan- 
dinavian. 

350 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    351 

them  capture  another  one,  and  another  one,  until  these  men  who 
are  carrying  an  intolerable  lo'ad  of  artificial  securities  find  that  they 
have  got  to  get  down  to  hard  pan  to  keep  their  football  at  all.  I 
am  willing  to  let  Jack  come  into  the  field  with  the  giant,  and  if 
Jack  has  the  brains  that  some  Jacks  that  I  know  in  America  have, 
then  I  should  like  to  see  the  giant  get  the  better  of  him,  with  the 
load  that  he,  the  giant,  has  to  carry — the  load  of  water.  For  I'll 
undertake  to  put  a  water-logged  giant  out  of  business  any  time,  if 
you  will  give  me  a  fair  field  and  as  much  credit  as  I  am  entitled  to, 
and  let  the  law  do  what  from  time  immemorial  law  has  been  ex- 
pected to  do — see  fair  play.  .  .  . 

The  facts  of  the  situation  amount  to  this:  that  a  comparatively 
small  number  of  men  control  the  raw  material  of  this  country;  that 
a  comparatively  small  number  of  men  control  the  water-powers 
that  can  be  made  useful  for  the  economic  production  of  the  energy 
to  drive  our  machinery;  that  that  same  number  of  men  largely 
control  the  railroads;  that  by  agreements  handed  around  among 
themselves  they  control  prices,  and  that  that  same  group  of  men 
control  the  larger  credits  of  the  country. 

When  we  undertake  the  strategy  which  is  going  to  be  necessary 
to  overcome  and  destroy  this  far-reaching  system  of  monopoly,  we 
are  rescuing  the  business  of  this  country,  we  are  not  injuring  it;  and 
when  we  separate  the  interests  from  each  other  and  dismember  these 
communities  of  connection,  we  have  in  mind  a  greater  community  of 
interest,  a  vaster  community  of  interest,  the  community  of  interest 
that  binds  the  virtues  of  all  men  together,  that  community  of  man- 
kind which  is  broad  and  catholic  enough  to  take  under  the  sweep 
of  its  comprehension  all  sorts  and  conditions  of  men;  that  vision 
which  sees  that  no  society  is  renewed  from  the  top  but  that  every 
society  is  renewed  from  the  bottom.  Limit  opportunity,  restrict  the 
field  of  originative  achievement,  and  you  have  cut  out  the  heart  and 
root  of  all  prosperity. 

The  only  thing  that  can  ever  make  a  free  country  is  to  keep  a 
free  and  hopeful  heart  under  every  jacket  in  it.  Honest  American 
industry  has  always  thriven,  when  it  has  thriven  at  all,  on  freedom; 
it  has  never  thriven  on  monopoly.  It  is  a  great  deal  better  to  shift 
for  ourselves  than  to  be  taken  care  of  by  a  great  combination  of 
capital.  I,  for  my  part,  do  not  want  to  be  taken  care  of.  I  would 
rather  starve  a  free  man  than  be  fed  a  mere  thing  at  the  caprice  of 
those  who  are  organizing  American  industry  as  they  please  to  or- 
ganize it.  I  know,  ajid  every  man  in  his  heart  knows,  that  the  only 
way  to  enrich  America  is  to  make  it  possible  for  any  man  who  has 
the  brains  to  get  into  the  game.  I  am  not  jealous  of  the  size  of  any 
business  that  has  grown  to  that  size.     I  am  not  jealous  of  any 


352     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

process  of  growth,  no  matter  how  huge  the  result,  provided  the  re- 
sult was  indeed  obtained  by  the  processes  of  wholesome  development, 
which  are  the  processes  of  efficiency,  of  economy,  of  intelligence,  and 
of  invention.  .  .  . 

Are  you  not  eager  for  the  time  when  the  genius  and  initiative 
of  all  the  people  shall  be  called  into  the  service  of  business?  when 
newcomers  with  new  ideas,  new  entries  with  new  enthusiasms,  inde- 
pendent men,  shall  be  welcomed?  when  your  sons  shall  be  able  to 
look  forward  to  becoming,  not  employes,  but  heads  of  some  small, 
it  may  be,  but  hopeful,  business,  where  their  best  energies  shall  be 
inspired  by  the  knowledge  that  they  are  their  own  masters,  with  the 
paths  of  the  world  open  before  them?  Have  you  no  desire  to  see 
the  markets  opened  to  all?  to  see  credit  available  in  due  proportion 
to  every  man  of  character  and  serious  purpose  who  can  use  it  safely 
and  to  advantage?  to  see  business  disentangled  from  its  unholy  alli- 
ance with  politics?  to  see  raw  material  released  from  the  control  of 
monopolists,  and  transportation  facilities  equalized  for  all?  and  every 
avenue  of  commercial  and  industrial  activity  levelled  for  the  feet  of 
all  of  us  who  would  tread  it?  Surely  you  must  feel  the  inspiration 
of  such  a  new  dawn  of  liberty! 

Alvin  Johnson:  The  Lahore?-' s  Turn  * 

One  of  these  assumptions,  perhaps  the  most  fundamental  and 
the  most  pernicious,  is  that  labor  is  a  status  out  of  which  men  "rise" 
to  higher  things.  "We  have  no  classes  in  Am.erica.  The  humblest 
workman,  if  he  is  industrious  and  thrifty,  may  rise  to  the  dizziest 
height  of  wealth  and  power."  "Humblest,"  did  you  say?  Charlie 
Schwab  was  an  object  of  humility  when  he  drove  a  milk  wagon  or 
fed  a  furnace  in  the  steel  works.  Now  he  is  an  object  to  be  revered. 
He  is  the  same  Charlie  Schwab,  however,  except  that  he  has  ex- 
changed the  vigor  of  youth  for  the  solidity  of  mature  years.  The 
accretion  of  esteem  is  not  in  the  man  but  in  the  circumstances. 

Just  so  in  the  feudal  time  it  was  possible  for  so  humble  a  person 
as  a  merchant  or  a  "usurer" — now  known  as  a  banker — to  succor  a 
great  lord  in  his  need  and  win  ennoblement.  It  was  possible  for  a 
despised  scribe — now  a  lawyer — to  rescue  a  king  from  his  entangle- 
ments and  win  a  seat  among  the  mighty.  One  could  "rise"  out  of 
trade,  banking,  the  law,  medicine,  the  Church.  If  one  lacked  the 
abilities  appropriate  to  the  aristocratic  rank,  or  if  opportunity  failed 
to  appear,  one  lived  painfully  and  died  miserably  in  his  humble 
calling. 

It  was  the  achievement  of  the  revolutions  of  the  seventeenth  and 

*  Reprinted  by  permission  of  The  New  Republic,  June  7,  1919,  p.  183. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    353 

eighteenth  centuries  that  the  character  of  humility  was  lifted  off  the 
middle  class  businesses  and  professions.  Afer  1688  in  England, 
after  1793  in  France,  it  ceased  to  be  necessary  for  a  lawyer  or  a 
merchant  to  "rise"  out  of  the  status  in  which  he  had  achieved  com- 
petence. There  were  certain  vestigial  aristocratic  privileges  denied 
them,  but  they  had  quite  prestige  enough  to  make  life  full  and  satis- 
fying. After  tv/o  centuries  of  middle-class  emancipation,  few  mem- 
bers of  the  class  ever  entertain  the  thought  of  the  earlier  status  of 
their  class.  Mr.  James  M.  Beck  never  thinks  of  it,  but  the  fact  is 
that  three  hundred  years  ago  the  men  who  really  counted  would 
have  felt  for  him  the  same  kind  of  contempt  that  he  now  feels  for 
a  competent  footman.  No  doubt  the  more  humane  among  them 
would  have  speculated  patronizingly  on  the  question  whether  he 
could  not  be  helped  to  rise  out  of  the  mean  status  of  scribe. 

Democracy  means  essential  equality  of  men,  but  there  can  be  no 
equality  of  men  except  on  the  basis  of  equal  dignity  of  function. 
Prate  of  equality  as  much  as  you  must,  you  never  do  consider  those 
your  equals  who  must  "rise"  out  of  their  status  to  yours.  That 
every  intelligent  workingman  knows.  You  say,  "I  was  once  a  work- 
ingman  myself;  I  feel  myself  one  with  the  working  class."  Nobody 
takes  your  statement  at  its  face  value.  Everybody  knows  that  be- 
hind your  words  there  lurks  a  smug  complacency.  "Even  though 
I  was  born  into  the  working  class,  see  what  I  have  become!"  More 
than  that:  there  is  a  hidden  assumption  that  you  never  really  be- 
longed among  the  "lowly";  that  you  had  characteristics  that  dis- 
tinguished you  from  the  cradle  for  a  higher  place.  That  is  just  the 
sort  of  thing  every  self-respecting  worker  means  to  rid  the  world  of. 
He  means  to  reshape  the  conditions  of  life  and  industry  so  that 
nobody  not  a  fool  will  ever  talk  about  "rising"  from  the  carpenter's 
bench  to  the  constructor's  roll-top  desk,  from  the  farm  to  the  bank 
or  the  bar  or  the  pulpit.  He  means  to  emancipate  his  job  and 
make  a  respected  career  of  it,  just  as  the  merchants  and  lawyers  of 
two  centuries  ago  emancipated  their  jobs. 

The  middle  class  won  emancipation  by  forcing  a  society  that 
lived  by  their  services  to  give  them  a  voice  in  the  conduct  of  public 
affairs.  As  soon  as  the  merchant  and  the  law^^er  got  their  hands  on 
the  budget,  the  aristocrats  and  generals  found  their  privileges  clipped. 
The  working  class  will  win  emancipation  by  forcing  society  to  give 
them  a  voice  in  the  public  affairs  that  now  count  most,  industrial 
affairs.  When  conditions  become  such  that  we  shall  consult  the 
United  Building  Trades  rather  than  the  associations  of  builders  and 
contractors  on  the  question  of  the  shortage  of  houses,  when  we  shall 
consult  the  Amalgamated  Association  of  Iron  and  Steel  Workers 
about  the  shortage  of  steel,  rather  than  Mr.  Gary  and  Mr.  Schwab, 


354     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

the  manual  trades  will  become  careers  out  of  M'hich  men  do  not  need 
to  "rise." 

But  this,  you  object,  is  to  fly  in  the  face  of  nature.  The  law- 
yer's trade,  you  argue,  is  inherently  superior  to  the  bricklayer's. 
Just  so  the  early  modern  military  of:ficer  would  have  argued  the  im- 
possibility of  equalizing  the  lawyer's  status  with  that  of  the  soldier. 
Was  not  the  most  incompetent,  drunken  general  infinitely  superior 
to  even  the  shrewdest  man  of  the  law?  Lawyers  as  a  class,  you 
urge,  have  a  higher  average  of  intellectual  ability.  Perhaps;  we 
shall  have  more  light  on  this  point  when  we  lay  out  as  much  effort 
on  the  general  education  of  bricklayers  as  on  that  of  lawyers.  The 
lawyer's  work  sharpens  the  wits;  the  bricklayer's  work  is  deadening. 
That  may  be  true  or  it  may  not;  anyway,  what  most  interests  so- 
ciety is  the  mental  energy  a  man  has  over  for  disinterested  uses  after 
the  earning  of  his  living,  and  the  bricklayer  may  have  as  much  sur- 
plus mental  energy  as  the  lawyer  when  we  end  the  working  day 
short  of  the  point  of  stupefying  fatigue. 

It  is  not  proposed  to  reduce  all  economic  conditions  to  a  dead 
level;  it  is  not  proposed  to  remove  the  natural  incentives  that  draw 
men  out  of  one  career  and  into  another.  All  that  democracy  re- 
quires is  that  the  manual  trades  shall  be  vested  with  industrial  re- 
sponsibility and  freed  from  the  servile  incidents  of  excessive  fatigue 
and  sweated  wages,  so  that  the  young  men  of  ability  and  pride  and 
ambition  who  have  a  personal  preference  for  them  may  elect  them 
without  feeling  that  they  are  committing  themselves  to  a  role  of 
inferiority.  That  is  essential  to  democracy.  It  is  also  essential  to 
economic  progress. 

When  business  became  a  career  that  a  man  of  ambition  could 
espouse,  it  underwent  an  enormous  expansion.  The  talents  that 
had  been  wasted  in  an  excessive  competition  for  place  in  the  narrow 
range  of  honorific  occupations,  such  as  the  army  and  government 
service,  were  put  to  creative  use.  The  British  took  the  lead  in  es- 
tablishing the  business  of  the  world  on  an  efficient  basis  largely  be- 
cause the  British  were  the  first  northern  nation  to  make  a  self-re- 
specting career  out  of  business.  What  limits  economic  development 
to-day  is  not  an  undersupply  of  business  efficiency  so  much  as  the 
unresponsiveness  if  not  the  positive  discontent  of  labor.  And  it  is 
vain  to  expect  labor  to  respond  to  the  requirements  of  an  intensi- 
fied production  so  long  as  industry  is  organized  on  a  basis  of  master 
and  man,  with  the  master  class  draining  away  those  elements  in 
the  working  population  who  are  most  needed  to  leaven  the  mass,  to 
endow  it  with  a  spirit  of  self-conscious  creativeness. 

We  are  wasting  immensely  valuable  resources  because  our  sys- 
tem does  not  enlist  the  full  cooperation  of  the  worker.    The  differ- 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    355 

ence  in  efficiency  between  the  man  who  is  doing  his  best  and  the 
man  who  is  doing  well  enough  to  hold  his  job  is  a  measure  of  our 
immediate  loss.  But  there  is  an  ultimate  loss  that  is  far  greater. 
That  is  the  loss  in  inventiveness  that  results  when  men  give  their 
bodies  to  their  work  but  not  their  whole  minds.  The  industrial 
process  is  susceptible  of  infinite  improvements  in  detail  and  the 
workers,  if  alert  and  intent  upon  the  problem  of  industry,  know 
just  where  these  improvements  are  needed.  They  know  collectively 
m.ore  about  this  than  any  manager,  however  well  equipped  for  effi- 
ciency engineering.  Most  of  them  lack  the  ability  to  devise  im- 
provements although  they  may  be  conscious  of  the  need.  Practical 
inventive  ability  is  rare.  But  nobody  can  question  that  there  is 
potentially  a  vastly  greater  volume  of  inventive  ability  in  the  whole 
working  class  than  in  the  small  group  of  inventors,  selected  for 
training  by  extremely  haphazard  methods,  who  are  almost  the  ex- 
clusive carriers  of  industrial  progress  to-day.  What  is  requisite  to 
the  development  of  this  incalculably  valuable  resource  is  the  active 
interest  of  the  workers  and  a  pride  of  workmanship  that  will  not 
only  direct  their  own  thinking  toward  the  problems  of  production 
but  will  enlist  their  support  for  public  technical  education.  These 
can  be  had  only  on  one  condition:  the  thoroughgoing  revision  of  the 
relations  between  employer  and  employe.  The  employe  must  be 
given  a  share  in  the  responsibility  for  production  if  he  is  to  give  in 
return  a  freeman's  initiative. 

But  what  of  the  interest  of  capital,  when  the  demands  of  labor 
have  been  satisfied?  It  is  a  noteworthy  fact  that  throughout  the 
course  of  recent  economic  history  what  appeared  at  first  to  be  a 
working  class  demand  proved  in  the  end  to  be  a  democratic  demand 
whose  satisfaction  advanced  the  interest  of  all  society.  When  labor 
demanded  higher  wages  the  employers  cried  out  that  their  profits 
were  being  sacrificed.  It  was  a  mistake.  There  have  been  excep- 
tional instances  of  high  profits  based  on  starvation  wages,  but  cap- 
ital is  on  the  whole  most  productive  where  wages  are  highest.  Com- 
pare the  present  economic  condition  of  America  and  Japan.  Neither 
country  suffered  economically  from  the  war;  on  the  contrary,  their 
industries  flourished  under  it.  Both  countries  gained  new  markets, 
but  Japan  more  than  America.  Now  that  the  peace  trade  of  the 
world  is  about  to  be  resumed  there  is  no  question  whatever  about 
America's  competing  power.  There  is  a  question  about  Japan's. 
In  America  all  signs  point  to  a  boom.  In  Japan  there  is  grave  fear 
of  depression.  But  of  the  industrial  nations  it  is  America  that  pays 
the  highest  wages,  Japan  the  lowest.  High  wages  pay.  The  em- 
ploying class  everywhere  cries  out  when  hours  are  reduced.  But 
the  general  effect  of  reduction  in  hours  has  been  to  increase  effi- 


356     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

ciency  in  greater  ratio.  Restrictions  upon  the  exploitation  of  child 
and  woman  labor  were  undertaken  in  the  interest  of  labor,  but  they 
have  turned  to  the  advantage  of  the  whole  of  society.  Labor  has 
most  to  gain  from  a  democratization  of  industry,  but  there  is  not 
the  least  reason  for  believing  that  capital  will  be  the  loser.  On  the 
contrary,  more  profits  will  be  made  in  America  when  labor  has  won 
its  proper  place  in  the  management  of  industry. 

But  if  that  were  not  the  case,  if  it  were  clearly  demonstrable  that 
other  classes  would  lose  not  only  in  power  but  in  material  gain,  no 
one  who  is  honestly  democratic  in  his  instincts  would  strive  to  re- 
tain the  status  quo.  Look  at  the  matter  from  the  point  of  view  of 
the  coming  generation;  thus  you  may  judge  impartially,  since  your 
personal  interests  will  have  been  extinguished.  Does  it  please  you 
to  contemplate  a  future  in  which  one  boy  or  girl  out  of  ten  may 
"rise"  to  a  condition  of  independence  and  dignity  while  the  other 
nine  must  remain  dependent  for  their  living  upon  the  hiring-and- 
firing  process,  with  no  interest  in  the  work  by  which  they  live  ex- 
cept such  as  can  be  included  in  the  pay  envelope?  Or  would  you 
rather  contemplate  a  future  in  which  the  range  of  jobs  that  have 
been  emancipated  from  the  status  of  wage  slavery  is  coextensive 
with  the  field  of  industry?  That  is  the  issue,  reduced  to  its  essen- 
tials. There  can  be  no  doubt  on  which  side  you  must  eventually 
take  your  stand,  if  you  are  a  democrat. 

Russell  H.  Conwell:  Acres  of  Diamonds* 

Yet  I  must  say  that  you  ought  to  spend  some  time  getting  rich. 
You  and  I  know  there  are  some  things  more  valuable  than  money; 
of  course  we  do.  Ah,  yes!  By  a  heart  made  unspeakably  sad  by  a 
grave  on  which  the  autumn  leaves  now  fall,  I  know  there  are  some 
things  higher  and  grander  and  sublimer  than  money.  Well  does  the 
man  know,  who  has  suffered,  that  there  are  some  things  sweeter  and 
holier  and  more  sacred  than  gold.  Nevertheless,  the  man  of  com- 
mon sense  also  knows  that  there  is  not  any  one  of  those  things  that 
is  not  greatly  enhanced  by  the  use  of  money.  Money  is  power. 
Love  is  the  grandest  thing  on  God's  earth,  but  fortunate  the  lover 
who  has  plenty  of  money.  Money  is  power;  money  has  powers; 
and  for  a  man  to  say,  "I  do  not  want  money,"  is  to  say,  "I  do  not 
wish  to  do  any  good  to  my  fellow  men."  It  is  absurd  thus  to  talk. 
It  is  absurd  to  disconnect  them.  This  is  a  wonderfully  great  life; 
and  you  ought  to  spend  your  time  getting  money,  because  of  the 
power  there  is  in  money.    And  yet  this  religious  prejudice  is  so 

*  From  Russell  H.  C<^nwell  and  His  Work  by  Agnes  R.  Burr.     Copy- 
right, 1917,  by  The  John  C  Winston  Co. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    357 

great  that  some  people  think  it  is  a  great  honor  to  be  one  of  God's 
poor.  I  am  looking  in  the  faces  of  people  who  think  just  that  way. 
I  heard  a  man  once  say  in  a  prayer  meeting  that  he  was  thankful 
that  he  was  one  of  God's  poor,  and  then  I  silently  wondered  what 
his  wife  would  say  to  that  speech,  as  she  took  in  washing  to  support 
the  man  while  he  sat  and  smoked  on  the  veranda.  I  don't  want  to 
see  any  more  of  that  kind  of  God's  poor.  Now,  when  a  man  could 
have  been  rich  just  as  well,  and  he  is  now  weak  because  he  is  poor, 
he  has  done  some  great  wrong;  he  has  been  untruthful  to  himself; 
he  has  been  unkind  to  his  fellowmen.  .  ,  . 

We  get  a  prejudice  against  rich  men  because  of  the  lies  that  are 
told  about  them.  The  lies  that  are  told  about  Mr.  Rockefeller  be- 
cause he  has  two  hundred  million  dollars — so  many  believe  them; 
yet  how  false  is  the  representation  of  that  man  to  the  world.  How 
little  we  can  tell  what  is  true  nowadays  when  newspapers  try  to  sell 
their  papers  entirely  on  some  sensation !  The  way  they  lie  about  the 
rich  men  is  something  terrible,  and  I  do  not  know  that  there  is  any- 
thing to  illustrate  this  better  than  what  the  newspapers  now  say 
about  the  city  of  Philadelphia.  A  young  man  came  to  m.e  the  other 
day  and  said,  "If  Mr.  Rockefeller,  as  you  think,  is  a  good  man,  why 
is  it  that  everybody  says  so  much  against  him?"  It  is  because  he 
has  gotten  ahead  of  us;  that  is  the  whole  of  it — just  gotten  ahead 
of  us.  Why  is  it  that  Mr.  Carnegie  is  criticized  so  sharply  by  an 
envious  world?  Because  he  has  gotten  more  than  we  have.  If  a 
man  knows  more  than  I  know,  don't  I  incline  to  criticize  somewhat 
his  learning?  Let  a  man  stand  in  a  pulpit  and  preach  to  thousands, 
and  if  I  have  fifteen  people  in  my  church,  and  they're  all  asleep, 
don't  I  criticize  him?  We  always  do  that  to  the  man  who  gets 
ahead  of  us.  Why,  the  man  you  are  criticizing  has  one  hundred 
millions,  and  you  have  fifty  cents,  and  both  of  you  have  just  what 
you  are  worth.  One  of  the  richest  men  in  this  country  came  into 
my  home  and  sat  down  in  my  parlor  and  said:  "Did  you  see  all 
those  lies  about  my  family  in  the  paper?"  ''Certainly  I  did;  I 
knew  they  were  lies  when  I  saw  them."  "Why  do  they  lie  about 
me  the  way  they  do?"  "Well,"  I  said  to  him,  "if  you  will  give  me 
your  check  for  one  hundred  millions,  I  will  take  all  the  lies  along 
with  it."  "Well,"  said  he,  "I  don't  see  any  sense  in  their  thus 
talking  about  my  family  and  myself.  Conwell,  tell  me  frankly, 
what  do  you  think  the  American  people  think  of  me?"  "Well,"  said 
I,  "they  think  you  are  the  blackest-hearted  villain  that  ever  trod  the 
soil!"  "But  what  can  I  do  about  it?"  There  is  nothing  he  can  do 
about  it.  .  .  .  But  there  are  ever  coming  to  me  young  men  who  say, 
"I  would  like  to  go  into  business,  but  I  cannot."  "Why  not?" 
"Because  I  have  no  capital  to  begin  on."    Capital,  capital  to  begin 


358     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

on!  Whatl  Young  man!  Living  in  Philadelphia  and  looking  at 
this  wealthy  generation,  all  of  whom  began  as  poor  boys,  and  you 
want  capital  to  begin  on?  It  is  fortunate  for  you  that  you  have  no 
capital.  I  am  glad  you  have  no  money.  I  pity  a  rich  man's  son. 
A  rich  man's  son  in  these  days  of  ours  occupies  a  very  difficult  posi- 
tion. They  are  to  be  pitied.  A  rich  man's  son  cannot  know  the 
very  best  things  in  human  life.  He  cannot.  The  statistics  of  Mass- 
achusetts show  us  that  not  one  out  of  seventeen  rich  men's  sons 
ever  die  rich.  They  are  raised  in  luxury,  they  die  in  poverty. 
Even  if  a  rich  man's  son  retains  his  father's  money,  even  then  he 
cannot  know  the  best  things  of  life.  .  .  . 

I  know  that  the  labor  unions  have  two  problems  to  contend  with, 
and  there  is  only  one  way  to  solve  them.  The  labor  unions  are 
doing  as  much  to  prevent  its  solving  as  are  the  capitalists  to-day, 
and  there  are  positively  two  sides  to  it.  The  labor  union  has  two 
difficulties;  the  first  one  is  that  it  began  to  make  a  labor  scale  for 
all  classes  on  a  par,  and  they  scale  down  a  man  that  can  earn  five 
dollars  a  day  to  two  and  a  half  a  day,  in  order  to  level  up  to  him 
an  imbecile  that  cannot  earn  fifty  cents  a  day.  That  is  one  of  the 
most  dangerous  and  discouraging  things  for  the  working  man.  He 
cannot  get  the  results  of  his  work  if  he  do  better  work  or  higher 
work  or  work  longer;  that  is  a  dangerous  thing,  and  in  order  to  get 
every  laboring  man  free  and  every  American  equal  to  every  other 
American,  let  the  laboring  man  ask  what  he  is  worth  and  get  it — 
not  let  any  capitalist  say  to  him:  ''You  shall  work  for  me  for  half 
of  what  you  are  worth";  nor  let  any  labor  organization  say,  ''You 
shall  work  for  the  capitalist  for  half  your  worth."  Be  a  man,  be 
independent,  and  then  shall  the  laboring  man  find  a  road  ever  open 
from  poverty  to  wealth.  The  other  difficulty  that  the  labor  union 
has  to  consider,  and  this  problem  they  have  to  solve  themselves, 
is  the  kind  of  orators  who  come  and  talk  to  them  about  the  oppres- 
sive rich.  I  can  in  my  dreams  recite  the  orations  I  have  heard 
again  and  again  under  such  circumstances.  My  life  has  been  with 
the  laboring  man.  I  am  a  laboring  man  myself.  I  have  often,  in 
their  assemblies,  heard  the  speech  of  the  man  who  has  been  invited 
to  address  the  labor  union.  The  man  gets  up  before  the  assembled 
company  of  honest  laboring  men  and  he  begins  by  saying,  "Oh,  ye 
honest,  industrious  laboring  men,  who  have  furnished  all  the  capital 
of  the  world,  who  have  built  all  the  palaces  and  constructed  all  the 
railroads  and  covered  the  ocean  with  her  steamships.  Oh,  you  la- 
boring men!  You  are  nothing  but  slaves;  you  are  ground  down  in 
the  dust  by  the  capitalist  who  is  gloating  over  you  as  he  enjoys  his 
beautiful  estates  and  as  he  has  his  banks  filled  with  gold,  and  every 
dollar  he  owns  is  coined  out  of  the  heart's  blood  of  the  honest  labor- 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO     359 

ing  man."  Now,  that  is  a  lie,  and  you  know  it  is  a  lie;  and  yet  that 
is  the  kind  of  speech  that  they  are  all  the  time  hearing,  represent- 
ing the  capitalists  as  wicked  and  the  laboring  men  so  enslaved.  Why, 
how  wrong  it  is!  Let  the  man  who  loves  his  flag  and  believes  in 
American  principles  endeavor  with  all  his  soul  to  bring  the  capitalist 
and  the  laboring  man  together  until  they  stand  side  by  side,  and 
arm  in  arm,  and  work  for  the  common  good  of  humanity. 


4.     REPRESSION 

Norman  Angell:  The  British  Revolution  and  the  Amer- 
ican Democracy  *  (pp.  269,  285,  293-6) 

One  hears  commonly  the  expression,  "There  is  no  fear  that  this, 
that  or  the  other  measure — of  mihtarism,  state  control  of  opinion, 
censorship,  or  what  not — will  ever  be  permanent  because  the  people 
here  have  control  and  they  will  never  tolerate  it."  But  tyrannies 
do  not  come  because  people  have  lost  their  power  to  resist  them; 
they  come  because  they  have  lost  the  desire  so  to  do.  The  problem 
of  freedom  is  at  bottom  the  problem  of  preserving  the  desire  for 
freedom;  preserving  the  capacity  to  know  what  it  is  even,  to  "know 
it  when  we  see  it."  Millions  of  men  of  pure  German  blood  are 
opposed  to  the  German  system.  (The  casualty  lists  of  the  Ameri- 
can army  reeks  with  German  names.)  Their  environment,  upbring- 
ing, the  ideas  they  have  absorbed,  have  brought  them  to  hate  the 
German  system.  Had  they  been  subject  to  the  environment  of 
Prussia — been  brought  up  in  their  fatherland,  in  other  words — they ' 
would  have  died  for  it  as  readily  as  do  their  relatives.  .  .  . 

I  have  attempted  to  show  that  our  welfare  and  freedom  really  do 
depend  upon  our  preserving  this  right  of  the  individual  conscience 
to  the  expression  of  its  convictions;  this  right  of  the  heretic  to  his 
heresy.  The  claim  has  been  based  not  upon  any  conception  of  ab- 
stract "right" — jus,  droit,  recht — but  upon  utility;  our  needs  of 
heresy,  upon  the  fact  that  if  we  do  not  preserve  it  it  is  not  alone  the 
individual  heretic  who  will  suffer,  but  all  of  us,  society.  By  sup- 
pressing the  free  dissemination  of  unpopular  ideas,  we  render  our- 
selves incapable  of  governing  ourselves  to  our  own  advantage,  and 
we  shall  perpetuate  that  condition  of  helplessness  and  slavery  for 
the  mass  which  all  our  history  so  far  has  shown. 

I  have  stressed  that  point  because  the  protagonist  who  attempts 
thus  to  place  the  case  for  freedom  and  welfare  upon  its  real  foun- 
dation feels  always  this  difficulty:  that  in  the  mind  of  most  per- 
haps, certainly  of  very  many  who  call  themselves  democrats,  there 
is  a  feeling  not  avowed,  but  real,  that  the  mind  and  opinion  and 
temper  of  the  common  folk  do  not  matter,  that  the  science  of  gov- 

*  Reprinted  by  permission  of  B.  W.  Huebsch. 

360 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    361 

ernment,  like  other  sciences,  should  be  left  to  the  experts,  and  that 
there  is  something  ridiculous  in  the  spectacle  of  a  bricklayer's  la- 
borer laying  down  the  law  in  matters  of  high  policy  and  passing 
judgment  upon  an  authority  who  has  given  his  life  to  the  study  of 
the  m.atter  under  judgment.  .  .  . 

The  need  of  individuality  in  thought  increases  in  direct  ratio  to 
the  increasing  complexity  of  our  social  arrangements.  The  very- 
fact  that  we  do  need  more  and  more  unity  of  action — regimentation, 
regulation — in  order  to  make  a  large  population  with  many  needs 
possible  at  all,  is  the  reason  mainly  which  makes  it  so  important  to 
preserve  variety  and  freedom  of  individual  thought.  If  ever  we  are 
to  make  the  adjustments  between  the  rival  claims  of  the  commu- 
nity and  the  individual,  between  national  sovereignty  or  independ- 
ence and  international  obligation,  between  the  need  for  common 
action  and  the  need  for  individual  judgment,  if  ever  our  minds  are 
to  be  equal  to  the  task  of  managing  our  increasingly  complex  so- 
ciety, we  must  preserve  with  growing  scrupulousness  the  right  of 
private  judgment  in  political  matters.  Because  upon  that  capacity 
for  private  judgment,  a  capacity  that  can  only  be  developed  by  its 
exercise,  depends  the  capacity  for  public  judgment,  for  political  and 
social  success,  success,  that  is,  in  living  together  in  this  world  of 
ours,  most  largely  and  most  satisfactorily.  .  .  . 

And,  unfortunately,  we  cannot  console  ourselves  with  the  thought 
that  force  is  never  successful  in  the  suppression  of  ideas.  It  is  often 
successful.  The  quality  of  our  society  improves  so  slowly  largely 
because  it  is  so  successful.  We  know  of  the  heretics  that  have  sur- 
vived, that  have  given  us  the  ideas  that  have  served  us  best,  that 
have  given  us  the  advances  that  we  have  made.  But  what  of  the 
heretics  that  would  have  given  us  those  liberations  centuries  earlier 
if  we  had  not  suppressed  thera. 

The  Europe  of  the  past  entangled  herself  in  a  net  of  her  own 
weaving — the  work  largely  of  theological  professors,  as  our  net  to- 
day is  woven  so  largely  by  political  professors.  Each  religious  group 
had  convinced  itself  that  everything  it  most  valued  on  earth,  the 
existence  of  any  kind  of  morality,  its  spiritual  freedom  here  as  well 
as  its  eternal  salvation  later,  depended  upon  its  defending  itself  by 
military  power  against  the  power  of  other  groups — defence,  of 
course,  involving  preventive  wars.  There  was  only  one  thing  which 
could,  and  finally  did,  put  an  end  to  the  resulting  welter:  a  revision 
of  the  prevailing  conceptions  as  to  the  relation  of  military  force  and 
power  over  the  other  group  to  those  moral  and  spiritual  values. 

The  modification  of  conception,  theory,  "sovereign  idea,"  what 
you  will,  was  only  possible  as  the  result  of  certain  heresies,  of  the 
conflict  of  one  idea  with  another,  and  so  the  correction  of  both.    But 


362      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

that  one  solution,  the  one  means  of  egress,  the  man  of  the  sixteenth 
and  seventeenth  centuries  in  Europe  deliberately  closed  by  making 
heresy  the  gravest  moral  offense  which  men  could  commit.  Each 
side  killed  its  heretic.  What  was  more  important  was  that  they 
killed  with  him  the  capacity  of  the  mass  to  think  clearly — or  to 
think  at  all  on  the  subjects  that  the  heretic  raised,  for  a  community 
which  has  no  heretics,  which  is  of  one  mind  on  a  given  matter,  is 
on  that  matter  mindless.  If  the  rival  communities  had  been  suc- 
cessful in  the  attempt  to  protect  themselves  by  military  means  from 
heresy  within  and  without,  we  should  have  been  fighting  wars  of 
religion  yet,  and  perhaps  organizing  our  massacres  of  St.  Bartholo- 
mew. But  certain  forces,  mechanical,  like  the  cheapening  of  print- 
ing; moral,  like  the  readiness  of  the  heretic  to  suffer,  were  too  strong 
for  the  imperfect  organization  of  the  State  or  the  Holy  Office.  But 
the  modern  State — as  Germany  proves — can  be  more  efficient  in  the 
control  of  opinion  and  the  consequent  suppression  of  heresy.  And 
we  can  hardly  doubt  that  if  unity  of  political  belief  seems — even 
though  it  may  not  really  be — necessary  to  the  successful  conversion 
of  a  nation  into  a  military  instrument,  the  modern  State  will  kill 
political  heresy  even  more  successfully  than  the  Church-State  killed 
religious  heresy;  and  in  lesser  or  greater  degree  with  the  analogous 
result  of  rendering  Europe  impotent  to  solve  the  very  problems  with 
which  our  institutions  were  created  to  grapple. 

Graham  Wallas:  The  Great  Society  *  (pp.  281-5) 

But  in  fact  one  of  the  most  important  results  of  modern  urban 
mdustrial  conditions  is  a  far-reaching  change  in  the  conditions  under 
which  most  men  can  directly  exchange  ideas  with  their  fellows  during 
the  hours  either  of  work  or  recreation.  It  would  indeed  be  an  ad- 
mirable thing  if  some  student  applied  the  methods  of  Mr.  Charles 
Booth  or  Mr.  Rowntree  to  an  examination  of  the  actual  extent  to 
which  the  serious  oral  discussion  of  public  questions  now  takes  place 
in  an  industrial  population.  My  own  impression  formed  after  ques- 
tioning a  good  many  people  in  different  parts  of  England  is  that,  in 
our  country,  the  quantity  of  such  discussion  which  takes  place  varies 
enormously  in  different  occupations,  that  it  takes  place  rather  out 
of  than  during  the  working  hours,  and  that,  on  the  whole,  it  is 
diminishing.  The  essentially  political  trades  used,  in  the  middle  of 
the  nineteenth  century,  to  be  tailoring  and  shoemaking,  where  men 
worked  in  indoor  workshops  in  small  groups  of  half  a  dozen  up  to 
twenty,  without  the  noise  of  machinery  or  the  presence  of  an  em- 
ployer. Next  to  them  came  the  compositors,  working  under  much 
♦  Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 


DOCTRINES  IN  DEFENSE  OF  THE  STATUS  QUO    363 

the  same  conditions,  and  the  cabinet  makers,  whose  work,  though  not 
silent,  was  not  so  noisy  as  to  prevent  conversation.  Now  all  boots 
and  nearly  all  clothes,  except  those  worn  by  a  small  rich  class,  are 
made  in  factories,  under  conditions  which  render  discussion  during 
working  hours  impossible.  The  proportion  of  workingmen  who  can 
now  talk  freely  at  their  work,  in  convenient  groups,  meeting  day 
after  day,  must  be  almost  negligible.  All  the  metal  trades  are  too 
noisy,  the  agricultural  trades  work  at  a  too  great  distance  from  each 
other,  and  modern  business  premises  are  now,  as  a  rule,  deliberately 
constructed  so  as  to  secure  that  those  engaged  in  clerical  work  shall 
always  be  under  the  eye  of  a  superior,  and  shall  be  prevented  from 
any  kind  of  conversation  about  anything  but  their  duty.  The  work- 
ing day  itself  is  shorter,  but  many,  if  not  most,  of  the  hours  saved 
from  work  are  now  spent  in  traveling  by  crowded  trains  and  trams 
between  the  place  of  business  and  the  widely  spread  homes  of  the 
present  day. 

The  urban  working  class,  which  already  forms  a  large  majority 
of  the  population  of  the  United  Kingdom,  and  will  soon,  apparently, 
form  a  majority  of  the  inhabitants  of  the  civilized  world,  is  there- 
fore becoming  more  and  more  dependent  for  its  whole  relation  to  the 
thought  of  our  time  upon  the  passive  reading  of  many  newspapers 
and  newspaper  placards,  and  of  a  much  smaller  number  of  maga- 
zines and  books.  The  newspaper  is  taking  to  a  large  extent  the 
place  of  conversation,  and  often  copies  the  discontinuity  and  fa- 
miliarity of  conversation  without  securing  that  which  is  its  essential 
value  as  an  intellectual  instrument,  the  stimulus  of  one  mind  by  free 
association  with  another  in  the  process  of  following  up  a  train  of 
ideas. 

But  just  because  a  vast  quantity  of  passive  reading  is  inevitable 
in  the  Great  Society  as  we  know  it  now  or  as  we  can  conceive  of  it 
in  the  near  future,  it  is  of  first  importance  to  consider  how  the  large 
ill-organized  system  which  supplies  it  can  be  made  more  effective. 
No  one  now  knows  whose  interests  direct  the  avowed  or  suggested 
policy  of  newspapers,  whose  shares  are  for  sale  in  the  open  market, 
and  which  cannot  exist  for  a  week  except  by  the  favor  of  great  ad- 
vertisers. Books,  being  signed,  are  less  dangerous  in  that  respect, 
and  perhaps  a  larger  extension  of  the  practice  of  signing  articles  may 
introduce  a  larger  element  of  responsibility  into  journalism.  The 
life  of  a  writer  of  "best  selling"  books  is  indeed  short,  and  his  temp- 
tations and  disillusionments  are  many;  but,  at  any  rate,  fractions  of 
the  influence  which  his  writings  have  created  cannot  be  bought  as  a 
matter  of  daily  business  on  the  Stock  Exchange.  And  an  able  jour- 
nalist with  a  reputation  for  independence,  who  signs  his  articles,  can, 
provided  he  is  at  first  content  with  perhaps  a  third  of  the  salary 


364     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

which  he  could  otherwise  earn,  even  now  get  an  opportunity  for 
responsible  utterance;  just  as  a  dramatist  with  something  to  say- 
can  get  some  sort  of  a  hearing  even  in  the  syndicated  theaters.  That 
deepest  form  of  sincerity,  which  requires  long  consideration  before 
the  declaration  of  opinion,  is,  of  course,  almost  impossible  for  a 
writer  who  has  to  comment  each  evening  on  news  which  may  be 
only  half  an  hour  old;  and  one  already  sees  that  signed  daily  jour- 
nalism may  become  the  special  province  of  the  neurotic  partisan 
whose  emotions  can  be  trusted  to  react  immediately  to  the  weakest 
stimulus.  But  the  practice  of  considered  signed  writing  on  the 
events  of  a  week  or  a  month  rather  than  on  those  of  a  few  hours 
may  become,  as  it  is  becom.ing  in  the  press  of  the  United  States  and 
France,  more  common  than  it  is  now  in  England. 

More  permanent  in  its  influence  is  the  enormous  cheapening  of 
the  production  and  distribution  of  books  in  which  writers  with  a 
reputation  to  lose  give  their  estimate  of  the  main  tendencies  of  their 
time.  Among  all  the  rawness  and  disorganization  of  life  in  the 
straggling  mining  villages  of  the  Rhondda  or  Don  valleys,  one  feels 
one's  feet  for  a  moment  on  something  like  a  firm  foundation  when 
one  sees  in  the  windows  and  doorways  of  the  little  tobacconist-news- 
agents' shops,  piles  of  Home  University  and  Cambridge  Scientific 
treatises  at  a  shilling,  resting  against  rows  of  serious  and  penetrating 
criticisms  of  society  in  the  form  of  fourpenny  or  sevenpenny  novels. 
An  old  pitman  once  said  to  me:  'Tt  makes  me  groan  to  think  o'  the 
thousands  of  hours  I've  spent  i'  reading  the  wrong  books;"  but  the 
authority  of  the  editors  of  the  new  cheap  series,  the  widespread 
knowledge  of  the  names  of  important  writers,  even  the  advice  of 
officials  in  Free  Libraries  (though  in  that  respect,  England  is  far 
behind  the  United  States)  gives  the  working  class  student  an  enor- 
mously better  chance  in  that  respect  than  he  had  when  he  was 
forced  to  trust  to  the  titles  on  a  barrow-load  of  second-hand  volumes. 


IX.    THE  POSSIBILITIES  OF  SOCIAL  SCIENCE 


Walter  Lippmann:  D?ift  and  31astery^  (pp.  269-276, 

285-288) 

When  we  cultivate  reflection  by  watching  ourselves  and  the 
world  outside,  the  thing  we  call  science  begins.  We  draw  the  hid- 
den into  the  light  of  consciousness,  record  it,  compare  phases  of  it, 
note  its  history,  experiment,  reflect  on  error,  and  we  find  that  our 
conscious  life  is  no  longer  a  trivial  iridescence,  but  a  progressively 
powerful  way  of  domesticating  the  brute. 

This  is  what  mastery  means:  the  substitution  of  conscious  in- 
tention for  unconscious  striving.  Civilization,  it  seems  to  me,  is 
just  this  constant  effort  to  introduce  plan  where  there  has  been 
clash,  and  purpose  into  the  jungles  of  disordered  growth.  But  to 
shape  the  world  nearer  to  the  heart's  desire  requires  a  knowledge 
of  the  heart's  desire  and  of  the  world.  You  cannot  throw  yourself 
blindly  against  unknown  facts  and  trust  to  luck  that  the  result  will 
be  satisfactory. 

Yet  from  the  way  many  business  men,  minor  artists,  and  modern 
philosophers  talk  you  would  think  that  the  best  world  can  be  cre- 
ated by  the  mere  conflict  of  economic  egotisms,  the  mere  eruption 
of  fantasy,  and  the  mere  surge  of  blind  instinct.  There  is  to-day 
a  widespread  attempt  to  show  the  futility  of  ideas.  Now  in  so  far 
as  this  movement  represents  a  critical  insight  into  the  emotional 
basis  of  ideas,  it  is  a  fundamental  contribution  to  human  power. 
But  when  it  seeks  to  fall  back  upon  the  unconscious,  when  the 
return  to  nature  is  the  ideal  of  a  deliberate  vegetable,  this  movement 
is  like  the  effort  of  the  animal  that  tried  to  eat  itself:  the  tail  could 
be  managed  and  the  hind  legs,  but  the  head  was  an  insurmountable 
difficulty.  You  can  have  misleading  ideas,  but  you  cannot  escape 
ideas.  To  give  up  theory,  to  cease  formulating  your  desire  is  not 
to  reach  back,  as  some  people  imagine,  to  profounder  sources  of 
inspiration.  It  is  to  put  yourself  at  the  mercy  of  stray  ideas,  of 
ancient  impositior.?,  or  trumped-up  fads.  Accident  becomes  the  mas- 
ter, the  accident  largely  of  your  own  training,  and  you  become  the 
plaything  of  whatever  happens  to  have  accumulated  at  the  bottom 
of  your  mind,  or  to  find  itself  sanctified  in  the  newspaper  you  read 
and  the  suburb  that  suited  your  income. 

*  Reprinted  by  permission  of  Henry  Holt  and  Co. 

367 


368     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

There  have  been  fine  things  produced  in  the  world  without  in- 
tention. Most  of  our  happiness  has  come  to  us,  I  imagine,  by  the 
fortunate  meeting  of  events.  But  happiness  has  always  been  a 
precarious  incident,  elusive  and  shifting  in  an  unaccountable  world. 
In  love,  especially,  men  rejoice  and  suffer  through  what  are  to  them 
mysterious  ways.  Yet  when  it  is  suggested  that  the  intelligence 
must  invade  our  unconscious  life,  men  shrink  from  it  as  from  dan- 
gerous and  clumsy  meddling.  It  is  dangerous  and  clumsy  now,  but 
it  is  the  path  vv^e  shall  have  to  follow.  We  have  to  penetrate  the 
dreaming  brute  in  ourselves,  and  make  him  answerable  to  our  waking 
life. 

It  is  a  long  and  difficult  process,  one  for  which  we  are  just  be- 
ginning to  find  a  method.  But  there  is  no  other  way  that  offers 
any  hope.  To  shove  our  impulses  underground  by  the  taboo  is  to 
force  them  to  virulent  and  uncontrolled  expression.  To  follow  im- 
pulse wherever  it  leads  means  the  satisfaction  of  one  impulse  at  the 
expense  of  all  the  others.  The  glutton  and  the  rake  can  satisfy  only 
their  gluttonous  and  rakish  impulses,  and  that  isn't  enough  for  hap- 
piness. What  civilized  men  aim  at  is  neither  whim  nor  taboo,  but 
a  frank  recognition  of  desire,  disciplined  by  a  knowledge  of  what  is 
possible,  and  ordered  by  the  conscious  purpose  of  their  lives. 

There  is  a  story  that  experimental  psychology  grew  from  the 
discovery  that  two  astronomers  trying  to  time  the  movement  of  the 
same  heavenly  body  reached  different  results.  It  became  necessary 
then  to  time  the  astronomers  themselves  in  order  to  discount  the 
differences  in  the  speed  of  their  reactions.  Now  whether  the  story 
is  literally  true  or  not,  it  is  very  significant.  For  it  symbolizes  the 
essential  quality  of  modern  science — its  growing  self -consciousness. 
There  have  been  scientific  discoveries  all  through  the  ages.  Heron 
of  Alexandria  invented  a  steam  turbine  about  200  B.  C.  They  had 
gunpowder  in  Ancient  China.  But  these  discoveries  lay  dormant, 
and  they  appear  to  us  now  as  interesting  accidents.  What  we  have 
learned  is  to  organize  invention  deliberately,  to  create  a  record  for 
it  and  preserve  its  continuity,  to  subsidize  it,  and  surround  it  with 
criticism.  We  have  not  only  scientific  work,  but  a  philosophy  of 
science,  and  that  philosophy  is  the  source  of  fruitful  scientific  work. 
We  have  become  conscious  about  scientific  method;  we  have  set 
about  studying  the  minds  of  scientists.  This  gives  us  an  infinitely 
greater  control  of  human  invention,  for  we  are  learning  to  control 
the  inventor.  We  are  able  already  to  discount  some  of  the  limita- 
tions of  those  engaged  in  research:  we  should  not,  for  example, 
send  a  man  who  was  color  blind  to  report  on  the  protective  coloring 
of  animals;  we  begin  to  see  how  much  it  matters  in  many  investiga- 
tions whether   the  student  is  an  auditory  or  a  visualizing  type. 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE  369 

Well,  psychology  opens  up  greater  possibilities  than  this  for  the 
conscious  control  of  scientific  progress.  It  has  begun  to  penetrate 
emotional  prejudice,  to  show  why  some  men  are  so  deeply  attached 
to  authority,  why  philosophers  have  such  unphilosophical  likes  and 
dislikes.  We  ask  now  of  an  economist,  who  his  friends  are,  what 
his  ambitions,  his  class  bias.  When  one  thinker  exalts  absolute 
freedom,  another  violent  repression,  we  have  ceased  to  take  such 
ideas  at  their  face  value,  and  modern  psychology,  especially  the 
school  of  Freud,  has  begun  to  work  out  a  technique  for  cutting  under 
the  surface  of  our  thoughts. 

The  power  of  criticizing  the  scientific  mind  is,  I  believe,  our  best 
guarantee  for  the  progress  of  scientific  discovery.  This  is  the  inner 
sanctuary  of  civilized  power.  For  when  science  becomes  its  own 
critic  it  assures  its  o\^^l  future.  It  is  able,  then,  to  attack  the  source 
of  error  itself;  to  forestall  its  own  timidities,  and  control  its  own 
bias. 

If  the  scientific  temper  were  as  much  a  part  of  us  as  the  falter- 
ing ethics  we  now  absorb  in  our  childhood,  then  we  might  hope  to 
face  our  problems  with  something  like  assurance.  A  mere  emotion 
of  futurity,  that  sense  of  "vital  urge"  which  is  so  common  to-day, 
will  fritter  itself  away  unless  it  comes  under  the  scientific  discipline, 
where  men  use  language  accurately,  know  fact  from  fancy,  search 
out  their  own  prejudice,  are  willing  to  learn  from  failures,  and  do 
not  shrink  from  the  long  process  of  close  observation.  Then  only 
shall  we  have  a  substitute  for  authority.  Rightly  understood,  sci- 
ence is  the  culture  under  which  people  can  live  forward  in  the  midst 
of  complexity,  and  treat  life  not  as  something  given  but  as  some- 
thing to  be  shaped.  Custom  and  authority  wuU  work  in  a  simple 
and  unchanging  civilization,  but  in  our  world  only  those  will  con- 
quer who  can  understand. 

There  is  nothing  accidental  then  in  the  fact  that  democracy  in 
politics  is  the  twin-brother  of  scientific  thinking.  They  had  to 
come  together.  As  absolutism  falls,  science  arises.  It  is  self-gov- 
ernment. For  when  the  impulse  which  overthrows  kings  and  priests 
and  unquestioned  creeds  becomes  self-conscious  we  call  it  science. 

Inventions  and  laboratories,  Greek  words,  mathematical  for- 
mulae, fat  books,  are  only  the  outward  sign  of  an  attitude  toward 
life,  an  attitude  which  is  self-governing,  and  most  adequately  named 
humanistic.  Science  is  the  irreconcilable  foe  of  bogeys,  and  there- 
fore, a  method  of  laying  the  conflicts  of  the  soul.  It  is  the  un- 
frightened,  masterful  and  humble  approach  to  reality — the  needs 
of  our  natures  and  the  possibilities  of  the  world.  The  scientific 
spirit  is  the  discipline  of  democracy,  the  escape  from  drift,  the 
outlook  of  a  free  man.    Its  direction  is  to  distinguish  fact  from 


370      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

fancy;  its  "enthusiasm  is  for  the  possible";  its  promise  is  the  shap- 
ing of  fact  to  a  chastened  and  honest  dream.    .    .    . 

For  the  discipline  of  science  is  the  only  one  which  gives  any  as- 
surance that  from  the  same  set  of  facts  men  will  come  approximately 
to  the  same  conclusion.  And  as  the  modern  world  can  be  civilized 
only  by  the  effort  of  innumerable  people  we  have  a  right  to  call 
science  the  discipline  of  democracy.  No  omnipotent  ruler  can  deal 
with  our  world,  nor  the  scattered  anarchy  of  individual  tempera- 
ments. Mastery  is  inevitably  a  matter  of  cooperation,  which  means 
that  a  great  variety  of  people  working  in  different  ways  must  find 
some  order  in  their  specialties.  They  will  find  it,  I  think,  in  a 
common  discipline  which  distinguishes  between  fact  and  fancy,  and 
works  always  with  the  implied  resolution  to  make  the  best  out  of 
what  is  possible. 

For  behind  this  development  of  common  m.ethod  there  are  pro- 
found desires  at  work.  As  yet  they  are  vaguely  humanitarian.  But 
they  can  be  enriched  by  withdrawing  them  from  vague  fantasy  in 
order  to  center  them  on  a  conception  of  what  human  life  might  be. 
This  is  what  morality  meant  to  the  Greeks  in  their  best  period,  an 
estimate  of  what  was  valuable,  not  a  code  of  what  should  be  for- 
bidden. It  is  this  task  that  morality  must  resume,  for  with  the  re- 
appearance of  a  deliberate  worldliness,  it  means  again  a  searching 
for  the  sources  of  earthly  happiness. 

In  some  men  this  quest  may  lead  to  luminous  passion.  "The 
state-making  dream,"  Wells  calls  it,  and  he  speaks  of  those  who 
"have  imagined  cities  grown  more  powerful  and  peoples  made  rich 
and  multitudinous  by  their  efforts,  they  thought  in  terms  of  harbors 
and  shining  navies,  great  roads  engineered  marvelously,  Jungles 
cleared  and  deserts  conquered,  the  ending  of  muddle  and  dirt  and 
misery;  the  ending  of  confusions  that  waste  human  possibilities; 
they  thought  of  these  things  with  passion  and  desire  as  other  men 
think  of  the  soft  lines  and  tender  beauty  of  women.  Thousands  of 
men  there  are  to-day  almost  mastered  by  this  white  passion  of  state- 
craft, and  in  nearly  every  one  who  reads  and  thinks  you  could  find, 
I  suspect,  some  sort  of  answering  response."  And  then  with  care- 
ful truth  he  adds,  "But  in  every  one  it  presents  itself  extraordinarily 
entangled  and  mixed  up  with  other,  more  intimate  things." 

We  begin  to  recognize  a  vague  spirit  which  may  suggest  a  com- 
mon purpose.  We  live  in  a  fellowship  with  scientists  whose  books 
we  cannot  read,  with  educators  whose  work  we  do  not  understand. 
Conservative  critics  laugh  at  what  they  call  the  futurist  habit  of 
mind.  It  is  very  easy  to  point  out  how  blind  and  unintelligent  is 
the  enthusiasm  of  liberal  people,  how  eager  they  are  to  accept  Berg- 
son,  Montessori,  Fi:eud  and  the  Cubists.     But  there  is  something 


JHE  POSSIBILITIES  OF  SOCIAL  SCIENCE  371 

fundamentally  dull  in  these  sneers.  For  granted  the  faddishness 
of  modern  people,  there  is  yet  more  than  faddishness  in  being 
friendly  to  novelty  in  a  novel  environment.  It  is  the  glimmer  of 
intention,  the  absurd,  human  contradictory  sign  of  faith  Men  call 
It  by  different  names— progress,  the  welfare  of  the  race— it  is  per- 
haps not  ready  for  precise  formulation  in  a  neat  and  inspirin<^  slo- 
gan. But  nevertheless,  it  is  the  business  of  critics  to  understand 
these  beginnings,  for  they  are  already  a  great  practical  force.  They 
enable  men  to  share  their  hopes  with  strangers,  to  travel  about  and 
talk  to  people  of  widely  different  professions  and  origin,  yet  to  find 
the  assurance  that  they  are  part  of  a  great  undertaking. 

Herbert  Croly:  Progressive  Democracy  *  (pp.  396-403) 

The  opportunity  for  the  enjoyment  of  a  more  liberal  life  by  the 
great  majority  of  the  wage-earners  depends  ultimately  on  the  in- 
creasing productivity  of  human  labor.  .  .  .  The  necessary  increase 
in  efikiency  can  ultimately  be  derived  from  only  one  source— from 
the  more  comprehensive  and  more  successful  application  to  industry 
of  scientific  methods  and  of  the  results  of  essentially' scientific  re- 
search. The  use  of  scientific  methods  and  results  in  industry  is  the 
natural  and  inevitable  accompaniment  of  its  reorganization  in  the 
interest  of  democratic  fulfillment.  Industrial  democracy  will  never 
accomplish  its  purpose,  unless  science  can  be  brought  increasingly 
to  its  assistance;  and  the  needed  assistance  will  have  to  be  rendered 
in  a  most  Hberal  measure. 

Modern  industrial  civilization  is,  of  course,  based  upon  the 
achievements  of  science  and  the  more  effective  control  of  man  over 
nature.  The  surplus  economic  value  on  which  the  hope  of  human 
liberation  depends  is  the  product  of  the  inventor,  the  machine,  and 
ultimately  of  the  scientific  investigator.  But  the  existing  economic 
system  h"S  not,  until  recently,  been  able  to  make  any  sufficient  use 
of  scientific  methods,  and  the  capitalistic  machine  has  been  in- 
different and  even  alien  to  the  scientific  spirit.  Science  is  patient, 
deliberate,  critical,  organic,  and  disinterested.  The  organization 
and  meLho:-s  of  business  have  been  impatient  and  amateurish,  and 
its  purposes  have  been  selfish  and  hidebound.  The  hero  of  the 
industrial  revolution  is  the  flexible  and  energetic  promoter,  who 
divined  the  opportunity  of  establishing  new  enterprises,  and  who 
could  command' the  necessary  capital  and  ability,  but  who  was  him- 
self essentially  a  pioneer,  a  sportsman,  and  a  man  who  lived  upon 
the  country.  Economic  development  in  its  earlier  phases  owes  an 
enormous  debt  to  these  adventurers,  but  the  permanent  occupation 
♦Copyright,  The  Macmillan  Company.    Reprinted  by  permission. 


372      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

of  the  country  which  they  invaded  has  required  a  different  group  of 
methods,  quahties,  and,  finally,  of  motives.  It  is  better  to  depend 
upon  a  well-equipped  general  staff,  which  will  obey  the  orders  of 
society  and  carry  out  an  approved  policy,  than  upon  Napoleons, 
who  convert  the  national  economic  resources  into  an  instrument  of 
personal  aggrandizement. 

Although  the  day  and  the  value  of  the  industrial  pioneer  are  by 
no  means  entirely  over,  he  is  being  gradually  superseded.  The  Na- 
poleons of  business  are  being  succeeded  by  the  Von  Moltkes.  .  .  . 

In  asserting  that  industrial  democracy  may  reconcile  the  work- 
ers to  the  discipline  required  by  industrial  efficiency,  I  am  not  merely 
allowing  the  wish  to  be  father  of  the  thought.  The  adjustment  be- 
tween the  two  will  not  be  automatic  and  general.  But  it  will  take 
place  in  certain  instances  as  the  result  either  of  enlightened  planning 
by  employers  or  enlightened  leadership  among  the  workers;  and 
wherever  it  takes  place,  it  should  quickly  and  decisively  prove  its 
superiority.  The  mutual  dependence  between  democracy  in  busi- 
ness and  science  in  business  will  be  established  in  practice.  Scien- 
tific managment  can  never  reach  its  highest  efficiency  in  a  commu- 
nity of  apprehensive  and  self-regarding  dependent  wage-earners.  It 
requires  for  its  better  operation  alert,  intelligent  and  interested  work- 
ers and  cordial  and  insistent  cooperation  among  them.  The  morale 
of  the  scientifically  managed  shops,  which  are  also  self-governing 
communities,  will  be  superior  to  that  of  the  business  autocracies,  just 
as  the  morale  of  an  army  of  patriots,  who  are  fighting  on  behalf  of 
a  genuinely  national  cause,  is  superior  to  that  of  an  army  of  merely 
mercenary  or  drafted  soldiers.  The  severer  the  discipline  which 
men  are  required  to  undergo,  the  more  they  need  the  inspiration  of 
a  disinterested  personal  motive  and  complete  acquiescence  in  the  pur- 
pose for  the  benefit  of  which  the  discipline  has  been  contrived. 
Scientific  management  will  need  the  self-governing  workshop  quite 
as  much  as  industrial  democracy  will  need  the  application  of  scien- 
tific methods  to  business. 

The  practical  dependence  of  scientific  industry  upon  industrial 
democracy  is  the  indication  of  an  underlying  fellowship  of  spirit. 
The  subordination  of  nature  to  human  purposes  is  associated  with 
the  determination  of  social  forms  and  conditions  by  human  ideals. 
Both  involve  victorious  assertion  of  the  human  will  and  the  faithful 
and  imaginative  exercise  of  the  human  intelligence.  Without  the 
help  of  science  the  human  race  would  have  remained  forever  the 
victim  of  vicissitudes  in  its  supply  of  food.  Without  the  advent  of 
democracy,  science  would  have  become  merely  an  engine  of  class 
oppression  and  would  have  been  demoralized  by  its  service.  Both 
expand  in  an  atmosphere  of  candor,  publicity,  mutual  good  faith  and 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE  373 

fearless  criticism.  Both  shrivel  up  in  a  secretive,  suspicious,  timid, 
and  self-regarding  atmosphere.  Democracy  can  never  permit  sci- 
ence to  determine  its  fundamental  purpose,  because  the  integrity  of 
that  purpose  depends  finally  upon  a  consecration  of  the  will,  but  at 
the  same  time  democracy  on  its  spiritual  side  would  be  impoverished 
and  fruitless  without  science.  The  fulfillment  of  democratic  pur- 
poses depends  upon  the  existence  of  relatively  authentic  knowledge, 
the  authority  of  Avhich  a  free  man  may  accept  without  any  compro- 
mise of  his  freedom.  The  acceptance  of  such  authority  becomes  a 
binding  and  cohesive  influence.  Its  representatives  can  within 
limits  serve  the  purposes  of  a  democratic  community  without  the 
friction  or  the  irrelevance  of  an  election.  Just  because  science  is 
coming  to  exercise  so  much  authority  and  be  capable  of  such  con- 
siderable achievements,  a  completer  measure  of  political  and  indus- 
trial democracy  becomes  not  merely  natural,  but  necessary. 

The  enormous  powers  for  good  and  evil  which  science  is  bring- 
ing into  existence  cannot  be  intrusted  to  the  good-will  of  any  one 
class  of  rulers  in  the  community.  The  community  as  a  whole  will 
not  derive  full  benefit  from  scientific  achievements  unless  the  in- 
creased power  is  widely  distributed  and  until  all  of  the  members 
share  in  its  responsibilities  and  opportunities.  All  along  the  line 
science  is  going  to  demand  of  faithful  and  enlightened  men  an 
amount  of  self-subordination  which  would  be  intolerable  and  tyran- 
nical in  any  but  a  self-governing  community. 

H.  G.  Wells:  The  Discovery  of  the  Future  * 
(pp.  33-36;  44;  58-61) 

I  must  confess  that  I  believe  quite  firmly  that  an  inductive 
knowledge  of  a  great  number  of  things  in  the  future  is  becoming  a 
human  possibility.  I  believe  that  the  time  is  drawing  near  when 
it  will  be  possible  to  suggest  a  systematic  exploration  of  the  future. 
And  you  must  not  judge  the  practicability  of  this  enterprise  by  the 
failures  of  the  past.  So  far  nothing  has  been  attempted,  so  far 
no  first-class  mind  has  ever  focussed  itself  upon  these  issues;  but 
suppose  the  laws  of  social  and  political  development,  for  example, 
were  given  as  many  brains,  were  given  as  much  attention,  criticism, 
and  discussion  as  we  have  given  to  the  laws  of  chemical  combination 
during  the  last  fifty  years,  what  might  we  not  expect?  .  .  . 

The  popular  idea  of  scientific  investigation  is  a  vehement,  aim- 
less collection  of  little  facts,  collected  as  the  bower  bird  collects 
shells  and  pebbles,  in  methodical  little  rows,  and  out  of  this  process, 

.  *  Reprinted  by  permission  of  B.  W.  Huebsch,  New  York. 


374      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

in  some  manner  unknown  to  the  popular  mind,  certain  conjuring 
tricks — the  celebrated  wonders  of  science — in  a  sort  of  accidental 
way  emerge.  The  popular  conception  of  all  discovery  is  accident. 
But  you  will  know  that  the  essential  thing  in  the  scientific  process 
is  not  the  collection  of  facts,  but  the  analysis  of  facts.  Facts  are 
the  raw  material,  and  not  the  substance  of  science.  It  is  analysis 
that  has  given  us  all  ordered  knowledge,  and  you  know  that  the  aim 
and  the  test  and  the  justification  of  the  scientific  process  is  not  a 
marketable  conjuring  trick,  but  prophecy.  Until  a  scientific  theory 
yields  confident  forecasts  you  know  it  is  unsound  and  tentative;  it 
is  mere  theorizing,  as  evanescent  as  art  talk  or  the  phantoms  poli- 
ticians talk  about.  The  splendid  body  of  gravitational  astronomy, 
for  example,  establishes  itself  upon  the  forecast  of  stellar  move- 
ments, and  you  would  absolutely  refuse  to  believe  its  amazing  as- 
sertions if  it  were  not  for  these  same  unerring  forecasts.  The  whole 
body  of  medical  science  aims,  and  claims  the  ability,  to  diagnose. 
Meteorology  constantly  and  persistently  aims  at  prophecy,  and  it  will 
never  stand  in  a  place  of  honor  until  it  can  certainly  foretell.  The 
chemist  forecasts  elements  before  he  meets  them — it  is  very  properly 
his  boast — and  the  splendid  manner  in  which  the  mind  of  Clerk 
Maxwell  reached  in  front  of  all  experiment  and  foretold  those  things 
that  Marconi  has  materialized  is  familiar  to  us  all.  .  .  . 

Such,  then,  is  the  sort  of  knowledge  of  the  future  that  I  believe 
is  attainable  and  worth  attaining.  I  believe  that  the  deliberate  di- 
rection of  historical  study  and  of  economic  and  social  study  toward 
the  future,  and  increasing  reference,  a  deliberate  and  courageous 
reference,  to  the  future  in  moral  and  religious  discussion,  would  be 
enormously  stimulating  and  enormously  profitable  to  our  intellec- 
tual life.  I  have  done  my  best  to  suggest  to  you  that  such  an 
enterprise  is  now  a  serious  and  practicable  undertaking.  .  .  . 

The  conditions  under  which  men  live  are  changing  with  an  ever- 
increasing  rapidity,  and,  so  far  as  our  knowledge  goes,  no  sort  of 
creatures  have  ever  lived  under  changing  conditions  without  under- 
going the  profoundest  changes  themselves.  In  the  past  century 
there  was  more  change  in  the  conditions  of  human  life  than  there 
had  been  in  the  previous  thousand  years.  A  hundred  years  ago, 
inventors  and  investigators  were  rare  scattered  men,  and  now  In- 
vention and  inquir}''  is  the  v/ork  of  an  organized  army.  This  cen- 
tury villi  see  changes  that  will  dwarf  tho?e  of  the  nineteenth  century, 
as  those  of  the  nineteenth  dwarf  those  of  the  eighteenth.  One  can 
see  no  sign  anjnvhere  that  this  rush  of  change  will  be  over  pres- 
ently, that  the  positivist  dream  of  a  social  reconstruction  and  of  a 
new  static  culture  phase  will  ever  be  realized.  Human  society 
never  has  been  quite  static,  and  it  will  presently  cease  to  attempt 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE  375 

to  be  static.  Everything  seems  pointing  to  the  belief  that  we  are 
entering  upon  a  progress  that  will  go  on,  with  an  ever-widening  and 
ever  more  confident  stride,  forever.  The  reorganization  of  society 
that  is  going  on  now  beneath  the  traditional  appearance  of  things, 
is  a  kinetic  reorganization.  We  are  getting  into  marching  order. 
We  have  struck  our  camp  forever  and  we  are  out  upon  the  roads. 

We  are  in  the  beginning  of  the  greatest  change  that  humanity 
has  ever  undergone.  There  is  no  shock,  no  epoch-making  incident — 
but  then  there  is  no  shock  at  a  cloudy  daybreak.  At  no  point  can 
we  say.  Here  it  commences,  now;  last  minute  was  night,  and  this  is 
morning.  But  insensibly  we  are  in  the  day.  If  we  care  to  look, 
we  can  foresee  growing  knowledge,  growing  order,  and  presently  a 
deliberate  improvement  of  the  blood  and  character  of  the  race. 
And  what  we  can  see  and  imagine  gives  us  a  measure  and  gives  us 
faith  for  what  surpasses  the  imagination. 

It  is  possible  to  believe  that  all  the  past  is  but  the  beginning  of 
a  beginning,  and  that  all  that  is  and  has  been  is  but  the  twilight  of 
the  dawn.  It  is  possible  to  believe  that  all  that  the  human  mind 
has  ever  accomplished  is  but  the  dream  before  the  awakening.  We 
cannot  see,  there  is  no  need  for  us  to  see,  what  this  world  will  be 
like  when  the  day  has  fully  come.  We  are  creatures  of  the  twi- 
light. But  it  is  out  of  our  race  and  lineage  that  minds  will  spring, 
that  will  reach  back  to  us  in  our  littleness  to  know  us  better  than 
we  know  ourselves,  and  that  will  reach  forward  fearlessly  to  com- 
prehend this  future  that  defeats  our  eyes.  All  this  world  is  heavy 
with  the  promise  of  greater  things,  and  a  day  will  come,  one  day  in 
the  unending  succession  of  days,  when  beings,  beings  who  are  now 
latent  in  our  thoughts  and  hidden  in  our  loins,  shall  stand  upon  this 
earth  as  one  stands  upon  a  footstool,  and  shall  laugh  and  reach  out 
their  hands  amidst  the  stars. 

H.  G.  Wells:  Social  Forces  in  England  and  America  * 

It  is  not  only  that  an  amplifying  science  may  give  mankind 
happier  bodies  and  far  more  active  and  eventful  lives,  but  that 
psychology  and  educational  and  social  science,  reenforcing  litera- 
ture and  working  through  literature  and  art,  may  dare  to  establish 
serenities  in  his  soul.  For  surely  no  one  who  has  lived,  no  one  who 
has  watched  sin  and  crime  and  punishment,  but  must  have  come 
to  realize  the  enormous  amount  of  misbehavior  that  is  mere  igno- 
rance and  want  of  mental  scope.  For  my  own  part,  I  have  never 
believed  in  the  devil.  And  it  may  be  a  great  undertaking  but  no 
more  impossible  to  make  ways  to  good  will  and  a  good  heart  in 
♦Reprinted  by  permission  of  Harper  &  Brothers. 


376      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

men  than  it  is  to  tunnel  mountains  and  dyke  back  the  sea.  The 
way  that  led  from  the  darkness  of  the  cave  to  the  electric  light  is 
the  way  that  will  lead  to  light  in  the  souls  of  men;  that  is  to  say, 
the  way  of  free  and  fearless  thinking,  free  and  fearless  experiment, 
organized  exchange  of  thoughts  and  results,  and  patience  and  per- 
sistence and  a  sort  of  intellectual  civility. 

And  with  the  development  of  philosophical  and  scientific  method 
that  will  go  on  with  this  great  increase  in  man's  control  over  him- 
self, another  issue  that  is  now  a  mere  pious  aspiration  above  abysses 
of  ignorance  and  difficulty  will  come  to  be  a  manageable  matter. 
It  has  been  the  perpetual  wonder  of  philosophers  from  Plato  on- 
ward that  men  have  bred  their  dogs  and  horses,  and  left  any  man 
or  woman,  however  vile,  free  to  bear  offspring  in  the  next  genera- 
tion of  men.  Still  that  goes  on.  Beautiful  and  wonderful  people 
die  childless  and  bury  their  treasure  in  the  grave,  and  we  rest  con- 
tent with  a  system  of  matrimony  that  seems  designed  to  perpetu- 
ate mediocrity.  A  day  will  come  when  men  will  be  in  possession 
of  knowledge  and  opportunity  that  will  enable  them  to  master  this 
position,  and  then  certainly  will  it  be  assured  that  every  generation 
shall  be  born  better  than  was  the  one  before  it.  And  with  that  the 
history  of  humanity  will  enter  upon  a  new  phase,  a  phase  which 
will  be  to  our  lives  as  daylight  is  to  the  dreaming  of  a  child  as  yet 
unborn. 

Alone  among  all  the  living  things  this  globe  has  borne,  man 
reckons  with  destiny.  All  other  living  things  obey  the  forces  that 
created  them;  and  when  the  mood  of  the  power  changes,  submit 
themselves  passively  to  extinction.  Man  only  looks  upon  those 
forces  in  the  face,  anticipates  the  exhaustion  of  Nature's  kindliness, 
seeks  weapons  to  defend  himself.  Last  of  the  children  of  Saturn, 
he  escapes  their  general  doom.  He  dispossesses  his  begetter  of  all 
possibility  of  replacement,  and  grasps  the  scepter  of  the  world. 
Before  man  the  great  and  prevalent  creatures  followed  one  another 
processionally  to  extinction;  the  early  monsters  of  the  ancient  seas, 
the  clumsy  amphibians  struggling  breathless  to  the  land,  the  rep- 
tiles, the  theriomorpha  and  the  dinosaurs,  the  bat-winged  reptiles 
of  the  Mesozoic  forests,  the  colossal  grotesque  first  mammals,  the 
giant  sloths,  the  mastodons  and  mammoths;  it  is  as  if  some  idle 
dreamer  molded  them  and  broke  them  and  cast  them  aside,  until 
at  last  comes  man  and  seizes  the  creative  wrist  that  would  wipe 
him  out  of  being  again. 

There  is  nothing  else  in  all  the  world  that  so  turns  against  the 
powers  that  have  made  it,  unless  it  be  man's  follower,  fire.  But  fire 
is  witless;  a  little  stream,  a  changing  breeze  can  stop  it.  Man  cir- 
cumvents.    If  fire  were  human  it  would  build  boats  across  the  rivers 


THE  POSSIBILITIES  OF  SOCIAL  SCIEKCE  377 

and  outmaneuver  the  wind.  It  would  lie  in  wait  in  sheltered  places, 
smoldering,  husbanding  its  fuel  until  the  grass  was  yellow  and  the 
forests  sere.  But  fire  is  a  mere  creature  of  man's;  our  world  be- 
fore his  coming  knew  nothing  of  it  in  any  of  its  habitable  places, 
never  saw  it  except  in  the  lightning  flash  or  remotely  on  some  vol- 
canic coronet.  Man  brought  it  into  the  commerce  of  life,  a  shining, 
resentful  slave,  to  hound  off  the  startled  beasts  from  his  sleeping- 
place  and  serve  him  like  a  dog. 

Suppose  that  some  enduring  intelligence  watched  through  the 
ages  the  successions  of  life  upon  this  planet,  marked  the  spreading 
first  of  this  species  and  then  that,  the  conflicts,  the  adaptations,  the 
predominances,  the  dyings  away,  and  conceive  how  it  would  have 
witnessed  this  strange  dramatic  emergence  of  a  rare  great  ape  to 
manhood.  To  such  a  mind  the  creature  would  have  seemed  at  first 
no  more  than  one  of  several  varieties  of  clambering  frugivorous 
mammals,  a  little  distinguished  by  a  disposition  to  help  his  clumsy 
walking  with  a  stake  and  reenforce  his  fist  with  a  stone.  The  fore- 
ground of  the  picture  would  have  been  filled  with  the  rhinoceros 
and  mammoth,  the  great  herds  of  ruminants,  the  saber-toothed  lion 
and  the  big  bears.  Then  presently  the  observer  would  have  noted  a 
peculiar  increasing  handiness  about  the  obscurer  type,  an  unwonted 
intelligence  growing  behind  its  eyes.  He  would  have  perceived  a 
disposition  in  this  creature  no  beast  had  shown  before,  a  disposi- 
tion to  make  itself  independent  of  the  conditions  of  climate  and  the 
chances  of  the  seasons.  Did  shelter  fail  among  the  trees  and  rocks, 
this  curious  new  thing  began  to  make  itself  harbors  of  its  own; 
was  food  irregular,  it  multiplied  food.  It  began  to  spread  out  from 
its  original  circumstances,  fitting  itself  to  novel  needs,  leaving  the 
forests,  invading  the  plains,  following  the  water  courses  upward  and 
downward,  presently  carrying  the  smoke  of  its  fires  like  a  banner 
of  conquest  into  wintry  desolations  and  the  high  places  of  the 
earth. 

The  first  onset  of  man  must  have  been  comparatively  slow,  the 
first  advances  needed  long  ages.  By  small  degrees  it  gathered  pace. 
The  stride  from  the  scattered  savagery  of  the  earlier  stone  period  to 
the  first  cities,  historically  a  vast  interval,  would  have  seemed  to 
that  still  watcher,  measuring  by  the  standards  of  astronomy  and 
the  rise  and  decline  of  races  and  genera  and  other  orders,  a  step 
almost  abrupt.  It  took,  perhaps,  a  thousand  generations  or  so  to 
make  it.  In  that  interval  man  passed  from  an  animal-like  obe- 
dience to  the  climate  and  the  weather  and  his  own  instincts,  from 
living  in  small  family  parties  of  a  score  or  so  over  restricted  areas 
of  indulgent  country,  to  permanent  settlements,  to  the  life  of  tribal 
and  national  communities  and  the  beginnings  of  cities.    He  had 


378      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

spread  in  that  fragment  of  time  over  great  areas  of  the  earth's  sur- 
face, and  now  he  was  adapting  himself  to  the  Arctic  circle  on  the 
one  hand  and  to  the  life  of  the  tropics  on  the  other;  he  had  invented 
the  plow  and  the  ship,  and  subjugated  most  of  the  domestic  ani- 
mals; he  was  beginning  to  think  of  the  origin  of  the  world  and  the 
mysteries  of  being.  Writing  had  added  its  enduring  records  to  oral 
tradition,  and  he  was  already  making  roads.  Another  five  or  six 
hundred  generations  at  most  bring  him  to  ourselves.  We  sweep 
into  the  field  of  that  looker-on,  the  momentary  incarnations  of  this 
sempiternal  being,  Man.     And  after  us  there  comes — 

A  curtain  falls. 

The  time  in  which  we,  whose  minds  meet  here  in  this  writing, 
were  born  and  live  and  die,  would  be  to  that  imagined  observer  a 
mere  instant's  phase  in  the  swarming  liberation  of  our  kind  from 
ancient  imperatives.  It  would  seem  to  him  a  phase  of  unprece- 
dented swift  change  and  expansion  and  achievement.  In  this  last 
handful  of  years  electricity  has  ceased  to  be  a  curious  toy,  and  now 
carries  half  mankind  upon  their  daily  journeys,  it  lights  our  cities 
till  they  outshine  the  moon  and  stars,  and  reduces  to  our  service  a 
score  of  hitherto  unsuspected  metals;  we  clamber  to  the  pole  of  our 
globe,  scale  every  mountain,  soar  into  the  air,  learn  how  to  overcome 
the  malaria  that  barred  our  white  races  from  the  tropics,  and  how 
to  draw  the  sting  from  a  hundred  such  agents  of  death.  Our  old 
cities  are  being  rebuilt  in  towering  marblej  great  cities  rise  to  vie 
with  them.  Never,  it  would  seem,  has  man  been  so  various  and 
busy  and  persistent,  and  there  is  no  intimation  of  any  check  to  the 
expansion  of  his  energies. 

And  all  this  continually  accelerated  advance  has  come  through 
the  quickening  and  increase  of  man's  intelligence  and  its  reinforce- 
ment through  speech  and  writing.  All  this  has  come  in  spite  of 
fierce  instincts  that  make  him  the  most  combatant  and  destructive 
of  animals,  and  in  spite  of  the  revenge  Nature  has  attempted  time 
after  time  for  his  rebellion  against  her  routines,  in  the  form  of 
strange  diseases  and  nearly  universal  pestilences.  All  this  has  come 
as  a  necessary  consequence  of  the  first  obscure  gleaming  of  delib- 
erate thought  and  reason  through  the  veil  of  his  animal  being.  To 
begin  with,  he  did  not  know  what  he  was  doing.  He  sought  his 
more  immediate  satisfaction  and  safety  and  security.  He  still  ap- 
prehends imperfectly  the  change  that  comes  upon  him.  The  illu- 
sion of  separation  that  makes  animal  life;  that  is  to  say,  passionate 
competing  and  breeding  and  dying,  possible,  the  blinkers  Nature 
has  put  upon  us  that  we  may  clash  against  and  sharpen  one  another, 
still  darken  our  eyes.  We  live  not  life  as  yet,  but  in  millions  of 
separated  lives,  still  unaware  except  in  rare  moods  of  illumination 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE  379 

that  we  are  more  than  those  fellow  beasts  of  ours  who  drop  off  from 
the  tree  of  life  and  perish  alone.  It  is  only  in  the  last  three  or  four 
thousand  years,  and  through  weak  and  tentative  methods  of  ex- 
pression, through  clumsy  cosmogonies  and  theologies,  and  with  in- 
calculable confusion  and  discoloration,  that  the  human  mind  has 
felt  its  way  towards  its  undying  being  in  the  race.  Man  still  goes 
to  war  against  himself,  prepares  fleets  and  armies  and  fortresses,  like 
a  sleep-walker  who  wounds  himself,  like  some  infatuated  barbarian 
who  hacks  his  owa  limbs  with  a  knife. 

But  he  awakens.  The  nightmares  of  empire  and  racial  conflict 
and  war,  the  grotesques  of  trade  jealousy  and  tariffs,  the  primordial 
dream-stuff  of  lewdness  and  jealousy  and  cruelty,  pale  before  the 
daylight  which  filters  between  his  eyelids.  In  a  little  while  we  indi- 
viduals will  know  ourselves  surely  for  corpuscles  in  his  being,  for 
the  thoughts  that  come  together  out  of  strange  wanderings  into  the 
coherence  of  a  waking  mind.  A  few  score  generations  ago  all  liv- 
ing things  were  in  our  ancestry.  A  few  score  generations  ahead,  and 
all  mankind  will  be  in  sober  fact  descendants  from  our  blood.  In 
physical  as  in  mental  fact  we  separate  persons,  with  all  our  differ- 
ence and  individuality,  are  but  fragments,  set  apart  for  a  little 
while  in  order  that  we  may  return  to  the  general  life  again  with 
fresh  experiences  and  fresh  acquirements,  as  bees  return  with  pollen 
and  nourishment  to  the  fellowship  of  the  hive. 

And  this  Man,  this  wonderful  child  of  old  earth,  who  is  our- 
selves in  the  measure  of  our  hearts  and  minds,  does  but  begin  his 
adventure  now.  Through  all  time  henceforth  he  does  but  begin 
his  adventure.  The  planet  and  its  subjugation  is  but  the  dawn  of 
his  existence.  In  a  little  while  he  will  reach  out  to  the  other  plan- 
ets, and  take  that  greater  fire,  the  sun,  into  his  service.  He  will 
bring  his  solvent  intelligence  to  bear  upon  the  riddles  of  his  indi- 
vidual interaction,  transmute  jealousy  and  every  passion,  control 
his  own  increase,  select  and  breed  for  his  embodiment  a  continually 
finer  and  stronger  and  wiser  race.  What  none  of  us  can  think  or 
will,  save  in  a  disconnected  partiality,  he  will  think  and  will  collec- 
tively. Already  some  of  us  feel  our  merger  with  that  greater  life. 
There  come  moments  v/hen  the  thing  shines  out  upon  our  thoughts. 
Sometimes  in  the  dark  sleepless  solitudes  of  night  one  ceases  to  be 
so-and-so,  one  ceases  to  bear  a  proper  name,  forgets  one's  quarrels 
and  vanities,  forgives  and  understands  one's  enemies  and  one's  self, 
as  one  forgives  and  understands  the  quarrels  of  little  children,  know- 
ing one's  self  to  be  indeed  a  being  greater  than  one's  personal  acci- 
dents, knowing  one's  self  for  Man  on  his  planet,  flying  swiftly  to 
unmeasured  destinies  through  the  starry  stillnesses  of  space. 


:So      CURRENT  SOCL\L  .\ND  LXDUSTRLAL  FORCES 


Jolni  Deti-ei/:  A  Xeic  Social  Science* 

To  note  that  supposed  '•scientific"  foundations  are  turning  into 
a  bimdle  of  myths  is  to  aid  in  defining  what  had  to  be  done  next. 
When  the  cheeks  of  the  augurs  so  bulge  that  their  speech  ceases 
to  be  understandable,  it  is  time  for  a  new  articulation.  The  e-^posed 
m>"th  is  that  the  existing  social  order  is  a  product  of  natural  laws 
which  are  expounded  in  a  rational,  a  scientific,  way  in  the  traditional 
sciences  of  societj*.  A  ''science*'  of  any  subject-matter  implies  a 
rational  order  in  that  subject-matter.  The  accepted  social 
sciences  do  not.  indeed.,  hold  that  any  comprehensive  direct- 
ive intelligence  is  so  much  at  the  base  of  the  existent  social 
order  as  perforce  to  justify  its  being  what  it  is.  But  political  and 
legal  science  rest  upon  the  assumption  of  certain  general  and  fixed 
conceptions  which  in  the  main  the  present  static  order  exemplifies. 
Economic  science  regards  the  dj.'namjic  order  of  society  as  the  result 
of  the  cumulative  intelligence  of  an  indefinitely  large  number  of 
beings,  each  devoting  his  own  intelligence  to  the  things  to  which  it 
is  peculiarly  adapted,  namely,  the  pursuit  of  interests  which  lie 
within  personal  control.  The  net  result  in  the  existent  social 
order  is  supposed  to  be  resolvable  into  an  immense  assemblage  of 
minute  and  wonderfully  interwoven  acts  of  intelligent  adaptation. 
While  sociolog}-  has  been  imeasy  under  the  domination  of  these 
sciences,  it  has  largely  devoted  itself  to  discovering  other  ''laws," 
especially  those  of  evolution,  which  determine  society  to  be  what 
it  is  and  in  so  far  justify  it,  or  which  at  least  throw  the  burden 
of  change  upon  the  future  workings  of  evolution,  that  Providence  of 
the  modem  enlightened  man,  piously  credulous  in  spite  of  all  his 
professed  scepticisms. 

If  the  war  has  revealed  that  our  existing  social  situation  is  in 
effect  the  result  of  the  convergence  of  a  large  number  of  independ- 
ently generated  historic  incidents,  it  has  shown  that  our  ordinary' 
rationalizing  and  jiistif>"ing  ideas  constitute  an  essential  mytholo,g>' 
in  their  attributions  of  phenomena  to  basic  principles  and  intelli- 
gently directed  foces.  \M:en  it  is  seen  that  intelligence  has  for 
the  most  part  been  confined  to  working  within  the  sphere  of  these 
various  incidental  happenings  to  glean  from  each  some  local  usu- 
fruct, it  becomes  apparent  that  the  net  result  is  something  irrational, 
something  unplaimed  and  unintended,  in  short  a  historic  accident. 
And  in  turn  it  appears  that  any  science  which  pretends  to  be  more 
than  a  description  of  the  particular  forces  which  are  at  work  and 
a  descriptive  tracing  of  the  particular  consequences  which  they 
♦Reprinted  bv  permission  of  The  Xeu'  Republic,  April  6,  1918,  pp.  292-4. 


THE  POSSIBILITIES  OF  SOCL\L  SCIENXE  381 

produce,  which  pretends  to  discover  basic  principles  to  which  social 
things  conform,  and  inherent  laws  which  "explain''  them,  is,  I  repeat, 
sheer  mythologj*.  This  is  the  negative  side  of  the  education  enforced 
by  the  war.  The  need  of  radical  modincation  of  aims  and  methods 
in  the  face  of  a  serious  social  crisis,  which  makes  clear  the  extent  to 
which  the  present  order  rests  upon  habir,  intrigue,  private  deflections 
of  social  forces  to  personal  uses,  love  of  barbaric  lusun.-  and  display, 
secret  business  and  secret  diplomacy,  reveals  how  little  aSairs  have 
been  effects  of  intelligent  desire  and  direction.  In  so  doing,  they 
give  a  blow  in  the  end  certain  to  be  fatal  to  the  '■■sciences''  which 
assume  intelligence  and  rational  law  in  their  explanations  and  S3'S- 
tematizations.  One  may  doubt  whether  William  James  foresaw  how 
soon  events  would  connrm  his  presentiment  that  a  substitution  of 
pragmatic  experimentalism  for  the  reign  of  rationalistic  sciences 
involves  an  '"alteration  in  the  seat  of  authority'." 

The  exigencies  have  shown  that  inteUigence  exists  as  an  operative 
power.  It  has  revealed  the  capacitj''  of  organized  intelligence  to 
take  hold  of  affairs  and  direct  the  movement  of  massed  details.  The 
response  of  aff'airs  has  proved  them  amenable  to  such  mangement. 
A  centralized  intellectual  policy  has  been  demonstrated  to  be  feasible 
as  well  as  imperatively  needed.  Empirical  description  of  forces 
is  not,  then,  the  whole  of  the  social  science  which  should  replace  our 
rationalized  mytholog}'.  "\Miat  is  required  is  large  working  h\'- 
potheses  concerning  the  uses  to  which  these  forces  are  to  be  put. 
Legislation,  administration  and  education  must  be  regarded  as 
ha\'ing  the  role  of  an  experimentation  which  tests  and  perfects  ideas 
rather  than  as  a  program  which  mereh*  executes  them.  There  is, 
of  course,  an  immense  amount  of  empirical  subject-matter  contained 
within  the  confines  of  existing  social  sciences.  The  onl\'  trouble  is 
that  has  been  '"framed  up"'  and  betrayed  by  its  mythical  and  apolo- 
getic setting.  When  released  from  this  context  it  is  available  for 
defining  present  tendencies  and  obstacles,  and  hence  is  relevant 
to  the  development  of  plans  of  social  reordering  and  a  technique  of 
social  control.  Only  b}'  becoming  instruments  of  projected  action 
and  responsible  to  consequences  eff'ected  by  action  can  the  social 
sciences  escape  from  archaic  theological  designs  and  from  methods 
framed  on  the  model  of  a  mathematical  rationalism  which  is  extinct 
outside  of  morals  and  poUtics. 

The  social  situation  creates  a  demand  for  such  a  science  if  the 
intelligence  to  be  brought  to  bear  on  social  reconstruction  is  not 
to  be  lamed  and  confused.  A  happy  presentiment  is  displayed  in 
the  fact  that  the  English  Labor  program  terminates  vnth  a  demand 
for  science  and  yet  more  science,  and  in  the  fact  that  the  hand 
worker  and  brain  worker  are  ever>-where  coupled.    But  the  outcome 


382      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

will  be  as  happy  as  the  instinct  only  if  it  be  acknowledged  that  a 
new  social  order  cannot  be  built  with  the  help  of  a  science  inherited 
from  an  old  social  order.  The  war  ought  to  give  a  final  blow  to  that 
myth  still  current  in  Marxian  circles  that  a  new  era  will  be  ushered 
in  by  the  breakdown  of  the  present  regime  of  capitalism  due  to  the 
completed  evolution  of  the  latter,  a  breakdown  in  which  it  remains 
only  for  the  proletariat  to  step  in  and  take  complete  possession. 
The  doctrine  smacks,  of  course,  of  the  Hegelian  dialectic  of  opposites. 
But  that  is  only  its  formal  aspect.  Its  subject-matter  is  the  belief  in 
a  catastrophe,  an  end  of  the  world,  to  be  followed  by  a  millennial 
period.  This  recurrent  doctrine  always  testifies  to  the  existence  of 
a  desire  which  is  not  capable  of  translation  into  specific  means  and 
ends  through  intelligent  action.  Its  adoption  into  "scientific  so- 
cialism" is  merely  a  confession  of  the  absence  of  science,  of  the 
absence  of  that  spirit  of  projecting,  reasoning  and  experimenting  in 
terms  of  detail  which  is  the  mark  of  every  science  that  has  achieved 
itself.  The  war  has  shown,  I  repeat,  that  it  takes  detailed  intelli- 
gence, not  mere  desire,  however  praiseworthy,  to  manage  society 
in  an  emergency.  It  has  thereby  cleared  the  way  for  a  science  of 
ideas  in  action  which  will  trust  not  to  negative  forces,  to  bankruptcy, 
to  bring  about  what  is  desired,  but  to  positive  energy,  to  intellectual 
competency,  to  competency  of  inquiry,  discussion,  reflection  and  in- 
vention organized  to  take  effect  in  action  in  directing  affairs.  The 
result  will  not  be  sudden  and  millennial.  But  it  will  be  steady;  and, 
as  in  all  experimental  science,  a  mistake  will  be  a  source  of  enlight- 
enment and  not  a  cause  of  reaction. 

James  Harvey  Robinson:  The  New  History  * 
(pp.  252-6) 

If  it  be  conceded  that  what  we  rather  vaguely  and  provisionally 
call  social  betterment  is  coming  to  be  regarded  by  large  numbers  of 
thoughtful  persons  as  the  chief  interest  in  this  game  of  life,  does  not 
the  supreme  value  of  history  lie  for  us  to-day  in  the  suggestions  that 
it  may  give  us  of  what  may  be  called  the  technique  of  progress,  and 
ought  not  those  phases  of  the  past  especially  to  engross  our  atten- 
tion which  bear  on  this  essential  point?  History  has  been  regu- 
larly invoked  to  substantiate  the  claims  of  the  conservative,  but 
has  hitherto  usually  been  neglected  by  the  radical,  or  impatiently 
repudiated  as  the  chosen  weapon  of  his  enemy.  The  radical  has 
not  yet  perceived  the  overwhelming  value  to  him  of  a  real  under- 
standing of  the  past.  It  is  his  weapon  by  right,  and  he  should 
wrest  it  from  the  hand  of  the  conservative.  It  has  received  a  far 
♦Copyright,  The  Macmillan  Company.     Reprinted  by  permission. 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE         383 

keener  edge  during  tlie  last  century,  and  it  is  the  chief  end  of  this 
essay  to  indicate  how  it  can  be  used  with  the  most  decisive  effect 
on  the  conservative. 

So  far  as  I  know,  no  satisfactory  analysis  has  ever  been  made  of 
the  conservative  and  radical  temperaments.  It  is  commonly  as- 
sumed that  every  boy  and  girl  is  born  into  one  or  the  other  party, 
and  doubtless  as  mere  animals  we  differ  greatly  in  our  bravery,  en- 
ergy and  hopefulness.  But  nurture  is  now  seen  to  be  all  that  sep- 
arates even  the  most  uncompromising  radical  from  a  life  far  lower 
than  that  of  any  savage  that  exists  on  the  earth  at  the  present  time. 
Even  the  recently  extinct  race  of  Tasmanians,  still  in  a  paleolithic 
stage  of  development,  represented  achievements  which  it  took  man 
long  ages  to  accumulate.  The  literally  uneducated  European  even 
to-day  could  neither  frame  a  sentence  nor  sharpen  a  stick  with  a 
shell.  A  great  part,  then,  of  all  that  goes  to  make  up  the  conserva- 
tive or  radical  may  be  deemed  the  result  of  education  in  the  broad- 
est sense  of  that  term,  including  everything  that  he  has  got  from 
associating  since  infancy  with  civilized  com.panions.  I  think  that 
the  modern  anthropologist  and  psychologist  would  agree  on  this 
point;  at  least,  every  one  who  allows  his  mind  to  play  freely  over 
the  question  must  concede  that  a  great  part  of  what  has  been  mis- 
taken for  nature  is  really  nurture,  direct  and  indirect,  conscious  or, 
more  commonly,  wholly  unconscious. 

Now  it  has  been  the  constant  objection  urged  by  the  conserva- 
tive against  any  reform  of  which  he  disapproved  that  it  involved  a 
change  of  human  nature.  He  has  flattered  himself  that  he  knew 
the  chief  characteristics  of  humanity  and  that,  since  it  was  hopeless 
to  alter  any  of  these,  a  change  which  seemed  to  imply  such  an 
alteration  was  obviously  impracticable.  This  argument  was  long 
ago  met  by  Montaigne,  who  declared  that  one  who  viewed  Mother 
Nature  in  her  full  majesty  and  luster  might  perceive  so  general  and 
so  constant  a  variety  that  any  individual  and  even  the  whole  king- 
dom in  which  he  happened  to  live  must  seem  but  a  pin's  point  in 
comparison.  But  there  is  a  wholly  new  argument  now  available. 
Whether  the  zoologists  are  quite  right  or  no  in  denying  the  possi- 
bility of  the  hereditary  transmission  of  acquired  traits,  there  is  no 
reason  to  think  that  one  particle  of  culture  ever  gets  into  the  blood 
of  our  human  species;  it  must  either  be  transmitted  by  imitation  or 
inculcation,  or  be  lost,  as  Gabriel  Tarde  has  made  clear. 

We  doubtless  inherit  the  aptitudes  of  our  parents,  grandparents, 
and  remoter  ancestors;  but  any  actual  exercise  that  they  may  have 
made  of  the  faculties  which  we  share  with  them  cannot  influence  us 
except  by  example  or  emulation.     Those  things  that  the  radical 


3S4      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

•would  alter  and  the  conservative  dcfcjid  are  therefore  not  traits  of 
human  nature  but  artificial  achievements  of  human  nurture.  .   .  . 

The  alterations  which  any  people  can  effect  within  a  half  century 
in  its  prevailing  ideas  and  institutions,  and  in  the  range  and  char- 
acter of  its  generally  diffused  knowledge,  are  necessarily  slight  when 
compared  with  the  vast  heritage  which  has  gradually  been  accumu- 
lating during  hundreds  of  thousands  of  years.  In  order  to  make 
the  nature  and  variety  of  our  abject  dependence  on  the  past  clear, 
we  have  only  to  consider  our  language,  our  laws,  our  political  and 
social  institutions,  our  knowledge  and  education,  our  view  of  this 
world  and  the  next,  our  tastes  and  the  means  of  gratifying  them. 
On  every  hand  the  past  dominates  and  controls  us,  for  the  most 
part  unconsciously  and  without  protest  on  our  part.  We  are  in 
the  main  its  willing  adherents.  The  imagination  of  the  most  radi- 
cally minded  cannot  transcend  any  great  part  of  the  ideas  and  cus- 
toms transmitted  to  him.  When  once  we  grasp  this  truth,  we  shall, 
according  to  our  mood,  humbly  congratulate  ourselves  that,  poor 
pygmies  that  we  are,  we  are  permitted  to  stand  on  the  giant's 
shoulders  and  enjoy  an  outlook  that  would  be  quite  hidden  from  us 
if  we  had  to  trust  to  our  own  short  legs;  or  we  may  resentfully 
chafe  at  our  bonds  and,  like  Prometheus,  vainly  strive  to  wrest 
ourselves  from  the  rock  of  the  past,  in  our  eagerness  to  bring  relief 
to  the  suffering  children  of  men.  .  .  . 

Mr.  John  Morley  has  given  an  unpleasant  but  not  inaccurate 
sketch  of  the  conservative,  "with  his  inexhaustible  patience  of 
abuses  that  only  torment  others;  his  apologetic  word  for  beliefs 
that  may  not  be  so  precisely  true  as  one  might  wish,  and  institu- 
tions that  are  not  altogether  so  useful  as  some  might  think  possible; 
his  cordiality  towards  progress  and  improvement  in  a  general  way, 
and  his  coldness  or  antipathy  to  each  progressive  proposal  in  par- 
ticular; his  pygmy  hope  that  life  will  one  day  become  somewhat 
better,  punily  shivering  by  the  side  of  his  gigantic  conviction  that 
it  might  well  be  infinitely  worse."  How  numerous  and  how  re- 
spectable is  still  this  class!  It  is  made  up  of  clergymen,  lawyers, 
teachers,  editors,  and  successful  men  of  affairs.  Doubtless  some  of 
them  are  nervous  and  apologetic,  and  try  to  find  reasons  to  disguise 
their  general  opposition  to  change  by  taking  credit  for  improve- 
ments to  which  they  contribute  nothing,  or  by  forwarding  some 
minor  changes  which  exhaust  their  powers  of  imagination  and  inno- 
vation. But  how  rarely  does  one  of  them  fail  when  he  addresses 
the  young  to  utter  some  warning,  some  praise  of  the  past,  some  dis- 
couragement to  effort  and  the  onward  struggle!  The  conservative 
is  a  perfectly  explicable  and  inevitable  product  of  that  long,  long 
period  before  man  woke  up  to  the  possibility  of  conscious  better- 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE 


o-^D 


ment.  He  still  justifies  existing  conditions  and  ideals  by  the  stand- 
ards of  the  past  rather  than  by  those  of  the  present  or  future.  He 
neither  vividly  realizes  how  mightily  things  have  advanced  in  times 
gone  by,  nor  has  he  the  imagination  to  see  how  easily  they  could  be 
indefinitely  bettered,  if  the  temperament  which  he  represents  could 
cease  to  be  artificially  fostered. 

Should  the  conservative  be  roused  to  defend  himself,  having  been 
driven  from  the  protection  which  his  discredited  conception  of  "hu- 
man nature"  formerly  offered,  he  may  ask  peevishly,  "What  does 
progress  mean,  anyway?"  But  no  one  who  realizes  the  relative  bar- 
barism of  our  whole  civilization,  which  contains,  on  a  fair  appraisal, 
so  little  to  cheer  us  except  promises  for  the  future,  will  have  the  pa- 
tience to  formulate  any  general  definition  of  progress  when  the  most 
bewildering  opportunities  for  betterment  summon  us  on  every  side. 
WTiat  can  the  conservative  point  to  that  is  not  susceptible  of  im- 
provement? 

There  is  one  more  solace,  perhaps  the  last,  for  the  hard-pressed 
conservative.  He  may  heartily  agree  that  much  improvement  has 
taken  place  and  claim  that  he  views  with  deep  satisfaction  all  de- 
liberate and  decorous  progress,  but  ascribe  to  himself  the  modest 
and  perhaps  ungrateful  function  of  acting  as  a  brake  which  pre- 
vents the  chariot  of  progress  from  rushing  headlong  down  a  decline. 
But  is  there  any  reason  to  suppose  that  any  brake  is  necessary? 
Have  fiery  radicals  ever  got  possession  of  the  reins  and  actually 
driven  for  a  time  at  a  breakneck  speed?  The  conservative  would 
find  it  extremely  difficult  to  cite  historical  examples,  but  doubtless 
the  Reign  of  Terror  would  occur  to  him  as  an  instance.  This  cer- 
tainly has  more  plausibility  than  other  alleged  examples  in  the 
whole  recorded  history  of  mankind.  But  Camille  Desmoulins,  one 
of  its  most  amiable  victims,  threw  the  blame  of  the  whole  affair, 
with  much  sound  reasoning,  on  the  precious  conservatives  them- 
selves. And  I  think  that  all  scholars  would  agree  that  the  incapable 
and  traitorous  Louis  XVI  and  his  runaway  nobles,  supported  by  the 
threat  of  the  monarchs  of  Prussia  and  Austria  were  at  the  bottom 
of  the  whole  matter.  In  any  case,  as  Desmoulins  urges,  the  blood- 
shed in  the  cause  of  liberty  was  as  nothing  to  that  which  had  been 
spilt  by  kings  and  prelates  in  maintaining  their  dominion  and  satis- 
fying their  ambitions. 

So  even  this  favorite  instance  of  o'er-rapid  change  will  scarcely 
bear  impartial  scrutiny,  and  we  may  safely  assert  that  so  far  the 
chariot  of  progress  has  always  been  toiling  up  a  steep  incline  and 
that  the  restraining  brake  of  the  conservatives  has  been  worse  than 
useless.  Maeterlinck  exhorts  us  never  to  fear  that  we  shall  be 
drawn  too  far  or  too  rapidly;  and  there  is  certainly  nothing  in  the 


386      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

past  or  present  to  justify  this  fear.  On  the  contrary,  as  he  says, 
*' There  are  men  enough  about  us  whose  exclusive  duty,  whose  pre- 
cise mission,  is  to  extinguish  the  fires  that  we  kindle."  *'At  every 
crossv;ay  on  the  road  that  leads  to  the  future  each  progressive  spirit 
is  opposed  by  a  thousand  men  appointed  to  guard  the  past.  Let  us 
have  no  fear  lest  the  fairest  towers  of  former  days  be  sufficiently 
defended.  The  least  that  the  m.ost  timid  among  us  can  do  is  not 
to  add  to  the  immense  dead  weight  which  nature  drags  along." 

History,  the  whole  history  of  man  and  of  the  organic  universe, 
seems  now  to  put  the  conserv^ative  arguments  to  shame.  Indeed, 
it  seems  to  do  more;  it  seems  to  justify  the  mystic  confidence  in 
the  future  suggested  by  INIaeterlinck's  Our  Social  Duty.  Perhaps, 
as  he  believes,  an  excess  of  radicalism  is  essential  to  the  equilibrium 
of  life.  "Let  us  not  say  to  ourselves,"  he  urges,  "that  the  best  truth 
always  lies  in  moderation,  in  the  decent  average.  This  would  per- 
haps be  so  if  the  majority  did  not  think  on  a  much  lower  plane  than 
is  needful.  That  is  why  it  behooves  others  to  think  and  hope  on  a 
higher  plane  than  seems  reasonable.  The  average,  the  decent  mod- 
eration of  to-day,  will  be  the  least  human  of  things  to-morrow.  At 
the  time  of  the  Spanish  Inquisition,  the  opinion  of  good  sense  and 
of  the  just  medium  was  certainly  that  people  ought  not  to  burn  too 
large  a  number  of  heretics;  extreme  and  unreasonable  opinions  ob- 
viously demanded  that  they  should  burn  none  at  all." 

Here  again  we  may  turn  to  the  past  for  its  authenticating  testi- 
mony. A  society  without  slaves  would  have  been  almost  incom- 
prehensible to  Plato  and  Aristotle.  To  the  latter,  slavery  was  an 
inevitable  corollary  of  human  society.  To  Innocent  III  a  church 
without  graft  was  a  hopeless  ideal.  To  Richelieu  a  foreign  service 
witliout  bribery  was  a  myth.  To  Beccaria  a  criminal  procedure 
without  torture  and  courts  without  corrupt  judges  were  a  dream. 
It  would  have  seemed  preposterous  enough  to  Franklin  to  forecast 
a  time  when  a  Philadelphian  could  converse  in  his  home  with 
friends  far  beyond  the  Mississippi,  or  to  assert  that  one  day  letters 
would  be  carried  to  all  parts  of  the  earth  for  so  small  a  sum  that 
even  the  poorest  would  not  find  the  expense  an  obstacle  to  commu- 
nication. But  all  these  hopeless,  preposterous  dreams  have  come 
to  pass,  and  that  in  a  little  more  than  a  hundred  years. 

From  forwarding  these  achievements,  the  conservative  has  hith- 
erto held  himself  aloof,  whether  from  temperament,  ignorance,  or 
despair.  But  let  us  exonerate  him,  for  he  knew  no  better.  He  had 
not  the  wit  to  see  that  he  was  a  vestige  of  a  long,  unenlightened 
epoch.  But  history  would  seem  to  show  that  this  period  of  ex- 
emption from  service  is  now  at  an  end.     It  is  plain  that  his  theory 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE         387 

that  human  nature  cannot  be  altered  is  exploded,  as  well  as  his 
belief  that  a  fractious  world  needs  him  to  apply  the  brakes. 

The  conservative  has,  in  short,  been  victimized  by  a  misunder- 
stood past.  Hitherto  the  radical  has  appealed  to  the  future,  but 
now  he  can  confidently  rest  his  case  on  past  achievement  and'  cur- 
rent success.  He  can  point  to  what  has  been  done,  he  can  cite 
what  is  being  done,  he  can  perceive  as  never  before  what  remains  to 
be  done,  and,  lastly,  he  begins  to  see  as  never  before  how  it  will 
get  done.  It  has  been  the  chief  business  of  this  essay  to  suggest 
what  has  been  done.  If  there  were  time,  I  might  try  to  show  that 
progress  in  knowledge,  and  its  application  to  the  alleviation  of  man's 
estate  is  more  rapid  now  than  ever  before.  But  this  scarcely  needs 
formal  proof;  it  is  so  obvious.  A  few  years  ago  an  eminent  French 
litterateur,  Brunetiere,  declared  science  bankrupt.  This  was  on  the 
eve  of  the  discoveries  in  radio-activity  which  have  opened  up  great 
vistas  of  possible  human  readjustments  if  we  could  but  learn  to 
control  and  utilize  the  inexhaustible  sources  of  power  that  lie  within 
the  atom.  It  was  on  the  eve  of  the  discovery  of  the  functions  of 
the  white  blood  corpuscles,  which  clears  the  way  for  indefinite  ad- 
vance in  medicine.  Only  a  poor  discouraged  man  of  letters  could 
think  for  a  moment  that  science  was  bankrupt.  No  one  entitled 
to  an  opinion  on  the  subject  believes  that  we  have  made  more  than 
a  beginning  in  penetrating  the  secrets  of  the  organic  and  inorganic 
world. 

In  the  fourth  canto  of  the  Injerno  Dante  describes  the  confines 
of  hell.  Here  he  heard  sighs  which  made  the  eternal  air  to  tremble. 
These  came  of  the  woe  felt  by  multitudes,  which  were  many  and 
great,  of  infants  and  of  women  and  men,  who,  although  they  had 
lived  guiltless  lives,  were  condemned  for  being  born  before  the  true 
religion  had  been  revealed.  They  lived  without  hope.  But  in  the 
midst  of  the  gloom  he  beheld  a  fire  that  conquered  a  hemisphere  of 
darkness.  Here,  in  a  place  open,  luminous,  and  high,  people  with 
eyes  slow  and  grave,  or  great  authority  in  their  looks,  sat  on  the 
greensward,  speaking  seldom  and  with  soft  voices.  These  were  the 
ancient  philosophers,  statesmen,  military  heroes,  and  men  of  letters. 
Neither  sad  nor  glad,  they  held  high  discourse,  heedless  of  the  wails 
of  infants,  unconscious  of  the  horrors  of  hell  which  boiled  beneath 
them.  They  knew  nothing  of  the  mountain  of  purgatorial  progress 
on  the  other  side  of  the  earth  which  others  were  climbing,  and  heaven 
was  forever  inaccessible  to  them.  Yet  why  should  they  regret  it — 
were  they  not  already  in  the  only  heaven  tbey  were  fit  for? 

As  for  accomplishing  the  great  reforms  that  demand  our  united 
efforts — the  abolition  of  poverty  and  disease  and  war,  and  the  pro- 
motion of  happy  and  rational  lives — the  task  would  seem  hopeless 


388     CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

enough  were  it  not  for  the  considerations  which  have  been  recalled 
above.  Until  very  recently  the  leaders  of  men  have  looked  back- 
ward for  their  standards  and  ideals.  The  intellectual  ancestors  of 
the  conservative  extend  back  in  an  unbroken  line  to  the  very  begin- 
ning of  human  history.  The  reformer  who  appeals  to  the  future 
is  a  recent  upstart.  He  believes  to  the  last  half  minute  of  our  his- 
torical reckoning.  His  family  is  a  new  one,  and  its  members  have 
often  seemed  very  black  sheep  to  the  good  old  family  of  conserva- 
tives who  have  found  no  names  too  terrible  to  apply  to  the  Anthony 
Collinses,  the  Voltaires,  and  Tom  Paines,  who  now  seem  so  inno- 
cent and  commonplace  in  most  of  their  teachings.  But  it  is  clear 
enough  to-day  that  the  conscious  reformer  who  appeals  to  the  fu- 
ture is  the  final  product  of  a  progressive  order  of  things.  While 
the  conservative  solemnly  opposed  what  were  in  Robert  Bacon's 
time  called  "suspicious  novelties,"  and  condemned  changes  either  as 
wicked  or  impracticable,  he  was  himself  being  gradually  drawn  along 
in  a  process  of  insensible  betterment  in  which  he  refused  con- 
sciously to  participate.  Even  those  of  us  who  have  little  taste  for 
mysticism  have  to  recognize  a  mysterious  unconscious  impulse  which 
appears  to  be  a  concomitant  of  natural  order.  It  would  seem  as  if 
this  influence  has  always  been  unsettling  the  existing  conditions  and 
pushing  forward,  groping  after  something  more  elaborate  and  intri- 
cate than  what  already  existed.  This  vital  impulse,  elan  vital,  as 
Bergson  calls  it,  represents  the  inherent  radicalism  of  nature  her- 
self. This  power  that  makes  for  experimental  readjustment — for 
adventure  in  the  broadest  sense  of  the  term — is  no  longer  a  concep- 
tion confined  to  poets  and  dreamers,  but  must  be  reckoned  with  by 
the  most  exacting  historian  and  the  hardest-headed  man  of  science. 
We  are  only  just  coming  to  realize  that  we  can  cooperate  with  and 
direct  this  innate  force  of  change  which  has  so  long  been  silently 
operating,  in  spite  of  the  respectable  lethargy,  indifference,  and  even 
protests  of  man  himself,  the  most  educable  of  all  its  creatures. 

At  last,  perhaps,  the  long-disputed  sin  against  the  Holy  Ghost 
has  been  found;  it  may  be  the  refusal  to  cooperate  with  the  vital 
principle  of  betterment.  History  would  seem,  in  short,  to  condemn 
the  principle  of  conservatism  as  a  hopeless  and  wicked  anachronism. 

Bertrand  Russell:  Roads  to  Freedom  *  (pp.  85,  193) 

When  we  consider  the  evils  in  the  lives  we  know  of,  we  find  that 
they  may  roughly  be  divided  into  three  classes.  There  are,  first, 
those  due  to  physical  nature;  among  these  are  death,  pain,  and  the 
difficulty  of  making  the  soil  yield  a  subsistence.     These  we  will  call 

*  Reprinted  by  permission  of  Henry  Holt  and  Coml5any,  New  York. 


THE  POSSIBILITIES  OF  SOCIAL  SCIENCE  389 

"physical  evils."  Second,  we  may  put  those  that  spring  from  de- 
fects in  the  character  or  aptitudes  of  the  sufferer:  among  these  are 
ignorance,  lack  of  will,  and  violent  passions.  These  we  will  call 
"evils  of  character."  Third  come  those  that  depend  upon  the  power 
of  one  individual  or  group  over  another:  these  comprise,  not  only 
obvious  tyranny  but  all  interference  with  free  development,  whether 
by  force  or  by  excessive  mental  influences  such  as  may  occur  in 
education.  These  we  will  call  "evils  of  power."  A  social  system 
may  be  judged  by  its  bearing  upon  these  three  kinds  of  evils.  .  .  . 

The  main  methods  of  combating  these  evils  are:  for  physical 
evils,  science;  for  evils  of  character,  education  (in  the  widest  sense) 
and  a  free  outlet  for  all  impulses  that  do  not  involve  domination; 
for  evils  of  power,  the  reform  of  the  political  and  economic  organi- 
zation of  society  in  such  a  way  as  to  reduce  to  the  lowest  possible 
point  the  interference  of  one  man  with  the  life  of  another.  We  will 
begin  with  the  third  of  these  kinds  of  evil,  because  it  is  evils  of 
power  specially  that  Socialism  and  Anarchism  have  sought  to  rem- 
edy. Their  protest  against  inequalities  of  wealth  has  rested  mainly 
upon  their  sense  of  the  evils  arising  from  the  power  conferred  by 
wealth.  .  .  . 

Coming  now  to  the  great  majority  who  will  not  choose  idleness, 
I  think  we  may  assume  that,  with  the  help  of  science,  and  by  the 
elimination  of  the  vast  amount  of  unproductive  work  involved  in 
internal  and  international  competition,  the  whole  community  could 
be  kept  in  comfort  by  means  of  four  hours'  work  a  day.  It  is 
already  being  urged  by  experienced  employers  that  their  employees 
can  actually  produce  as  much  in  a  six-hour  day  as  they  can  when 
they  work  eight  hours.  In  a  world  where  there  is  a  much  higher 
level  of  technical  instruction  than  there  is  now,  the  same  tendency 
will  be  accentuated.  People  will  be  taught  not  only,  as  at  present, 
one  trade,  or  one  small  portion  of  a  trade,  but  several  trades,  so  that 
they  can  vary  their  occupation  according  to  the  seasons  and  the 
fluctuations  of  demand.  Every  industry  will  be  self-governing  as 
regards  all  its  internal  affairs,  and  even  separate  factories  will  de- 
cide for  themselves  all  questions  that  only  concern  those  who  work 
in  them.  There  will  not  be  capitalist  management,  as  at  present, 
but  management  by  elected  representatives  as  in  politics.  .  .  . 

The  world  that  we  must  seek  is  a  world  in  which  the  creative 
spirit  is  alive,  in  which  life  is  an  adventure  full  of  joy  and  hope, 
based  rather  upon  the  impulse  to  construct  than  upon  the  desire  to 
retain  what  we  possess  or  to  seize  what  is  possessed  by  others.  It 
must  be  a  world  in  which  affection  has  free  play,  in  which  love  is 
purged  of  the  instinct  for  domination,  in  which  cruelty  and  envy 
have  been  dispelled  by  happiness  and  the  unfettered  development  of 


390      CURRENT  SOCIAL  AND  INDUSTRIAL  FORCES 

all  the  instincts  that  build  up  Hfe  and  fill  it  with  mental  delights. 
Such  a  world  is  possible;  it  waits  only  for  men  to  wish  to  create  it. 

Meantime  the  world  in  which  we  exist  has  other  aims.  But  it 
will  pass  away,  burnt  up  in  the  fire  of  its  own  hot  passions;  and 
from  its  ashes  will  spring  a  new  and  younger  world,  full  of  fresh 
hope,  with  the  light  of  morning  in  its  eyes. 


INDEX 


Absentee  ownership,  97-103;   309-10. 

Adams,  T.  S.,  Excess  Profits  Tax,  163-5. 

Alschuler,  Samuel,  Award  in  meat  in- 
dustries, 153-4. 

American  Federation  of  Labor,  Con- 
vention in  1919,  220-22;  courts  and, 
223-41;  reconstruction  program,  312- 
14;  steel  trades,  221-2;  strength, 
221;  success  of,  211-13. 

Angell,  Norman,  British  Revolution  and 
American  Democracy,  360-62. 

Banks  and  credit,  157-61. 

Bloomfield,  Meyer,  Management  and 
Men,  25-6;   187;   322-3. 

Bolshevism,  299-304. 

Brandeis,  Louis,  Other  People's  Money 
and  How  the  Bankers  Use  It,  122-30. 
Sharing  Responsibility,  321-2. 

British  Labor  Party,  Reconstruction 
Program,  167-86. 

Brooks,  J.  G.,  American  Syndicalism 
and  the  I.  W.  W.,  205-7;   277-83. 

Bruere,  Robert  W.,  Immediate  Require- 
ments, 314-15. 

Capitalization,  common  stock  and, 
101-3;  control,  71-5;  meat  packers, 
76;  tobacco,  75-6;  value  and,  69-76. 

Chamber  of  Commerce,  U.  S.,  Industrial 
Principles,  346-8. 

Class  antagonism,  1-6. 

Cole,  G.  D.  H.,  Self  Government  in 
Industry,  91-96. 

Concentration,  freedom  under,  350-2; 
scope,  71-3;  social  effects,  62-5; 
state  interference,  104-15. 

Conwell,  Russell  H.,  Acres  of  Diamonds, 
356-8. 

Credit,  concentration  of,  122-30;  free- 
dom under,  350-2;  strategy  of,  72-5; 
taxation  and,  156-166,  180-83. 

Croly,  Herbert,  Progressive  Democracy, 
310-12;  371-73;  Promise  of  Ameri- 
can Life,  119-22;   257-60. 

Cycles,  business,  49-55. 


Debt,  amounts,  159-63;  payment  for 
war,  35;  180-83;  posterity  and, 
156-7;    taxation  and,  163-66. 

Democracy  in  industry,  40-44;  175-79; 
305-28;  A.  F.  of  L.  program,  312-14; 
definition  of,  314-15;  chrect  action 
and,  19S-210;  employers'  view  of, 
335-49;  Industrial  Councils,  188-95; 
meaning  of,  324-5;  partnership  and, 
307-8;  reform  inadequate,  250-256; 
responsibihty  of  workers,  305-7;  321- 
2;  share  in  management,  308-10. 

Depression  and  prosperity,  49-55. 

Dewey,  John,  A  New  Social  Science, 
380-82. 

Dial,  15,  199,  250,  291,  317. 

Direct  action,  democracy  versus,  199- 
205;  examples  of,  208;  menace  of, 
283-5;  rninorit}'  rights,  273-4  syn- 
dicalistic, 266-9;  tactics  of,  205-7; 
tendency  toward,  207-8. 

Direction  of  industry,  90-130. 

Durant,  Will,  Future  of  American  So- 
cialism, 291-6. 

EcoNoinc  man,  329-34. 

Efficiency,  32-37;  defects  in,  260-63; 
happiness  under,  247-50. 

Employment,  insurance,  170-75;  se- 
curity in,  170-75. 

Exports,  and  production,  30. 

Federal  Trade   Commission,     76-89; 

115-118;  207-227;  321. 
Fisher,  Irving,  Making  Posterity  Pay, 

156-7- 
Foreign    trade,    production    and,    30; 

surplus  product  and,  147-8. 
Frankfurter,    Felix,    Labor    Standards, 

154-5;   meaning  of  unrest,  324-5. 
Freedom,     200-204,      226-7,      246-8; 

business,     350-52,      labor,     352-56; 

thought,  360-64. 
Friday,  David,  piroduction,  28-32. 
Funds  of  reorganization,  133-196;  hope 

of  democracy,  142-7. 


391 


392 


INDEX 


Gantt,  H.  L.,  eflBciency,  32-4. 

Gary,  E.  H.,  345;   wage  system,  94-95. 

Gleason,    Arthur,    British   Labor   and 

the  War,  20S-10. 
Guilds,  national,  91-96;  284-5. 

Hamilton,  W.  H.,  Price  System  and 

Social  Policy,  53-68. 
Henderson,  Arthur,  Aims  of  Labor,  3-5. 
Hobson,   J.   A.,   Democracy   after   the 

War,  5,  44,   133;  Industrial  System, 

133-165. 
Hours  of  work,  34-8. 
Hoxie,  Robert  F.,  Trade  Unionism  in 

the  United  States,  211,  224,  256. 

Individualism,   prevalence  of,   65-67; 

reconstruction  versus,  332-4;    value 

of,  348-9. 
Industrial  Commission,  Federal,  26,  95, 

98. 
Industrial  Councils,  188-95. 
Inflation,  52-3. 
I.  W.  W.,  277-S3. 

Johnson,  Alvin,  To  Save  Capitalism, 
149-50;   The  Laborer's  Turn,  352-6. 

Kahn,  Otto  H.,  individualism,  348-9. 
Kallen,   H.   M.,   Structure  of  Lasting 

Peace,  7. 
Kellogg,  Paul  U.,  British  Labor  and  the 

War,  208-10. 
King,  W.  I.,  Wealth  and  Income  of  the 

people  of  the  United  States,  27,  141, 

345- 

Labor,  organized,  collective  bargain- 
ing, 212-13;  convention  of  A.  F.  of 
L.,  220-22;  constructive  program, 
294-96;  courts  and,  221-41;  democ- 
racy and,  310-12;  direct  action, 
199-210;  Great  Britain  and,  189-91; 
208-10;  National  War  Labor  Board, 
218-19;  Peace  Treaty  and,  217-18; 
shop  committees,  317-21;  surplus 
product,  139-41;  strikes,  215-16; 
trade  unions,  211-21. 

Laski,  Harold  J.,  Authority  in  the 
Modern  State,  10:1-15. 

Laughlin,  J.  Laurence,  Credit  of 
Nations,  157-63. 

Law  and  Labor,  223-41;  A.  F.  of  L. 
on  judiciary,  223;  legal  rights  of 
unions,  228-41;  prejudice  of  courts, 
227-8. 


Levine,  Louis,  Syndicalism  in  France, 

264-77. 
Lippmann,  Walter,  Drift  and  Mastery, 

229-367. 

MacKaye,  James,  Americanized  So- 
cialism, 296-8. 

Management,  55-6;  absentee,  97-103; 
control  of,  97-101;  credit  and,  122- 
30;  minority  control,  97-101;  sep- 
arate from  ownership,  71-5;  share 
with  labor,  315-17. 

Manly,  Basil,  1-3;   116-117. 

Marot,  Helen,  Why  Reform  is  Futile, 
250-56. 

Mason,  Stephen  C,  employment  rela- 
tions, 336-45- 

Mediation  commission.  President's,  97, 

309- 

Miller,  A.  C,  Industries  m  Readjust- 
ment, 52-3. 

Millionaires,  355-8. 

Minimum,  social,  advantage  to  busi- 
ness, 149-50;  amount  of,  150-4; 
British  Labor  Party  and,  169-70; 
standards,  146,  154-5,  305-7. 

Mitchell,  W.  C,  Business  Cycles,  49-52, 

71-5- 
Morgan,  J.  P.,  loi,  122-5. 

National  Association  of  Manufac- 
turers, 24,  165,  337. 

Nationalization,  177-8. 

New  Republic,  149,  192,  260,  301,  352, 
380. 

Ogburn,  W.  F.,  cost  of  living,  151-53. 

Organization  of   industry;    production 

and,  38-45;    wartime  and  after,  38- 

43- 
Output,  incentives  to,  50-51,  limitation 

of,  36-8. 
Overproduction,   fear  of,     26-7,    32-7; 
Veblen  and,  17-19. 

Partners,  labor  and  capital  as,  335-49. 

Peace  Conference,  labor  principles 
adopted,  217-18. 

Polakov,  W.  N.,  34-6. 

Poverty,  147-53- 

Powell,  Thomas  R.,  Collective  Bargain- 
ing before  the  Supreme  Court,  228-41. 

Price  system,  49-89;  limitation  and 
production,  15-25;  28-32;  product 
inefficient,  32-36;  social  policy  and, 
53-68;   tactics  of,  49-52. 


INDEX 


393 


Production,  inefficiency  of,  32-6;  or- 
ganization of,  38-45;  per  capita, 
27-28;  potentiality  of,  18-45;  restric- 
tion of,  24-32;  wartime  and  after, 
28-32. 

Profits,  incentive  to,  49-50;  329-34; 
influence  of,  29-31;  labor's  share,  26; 
sabotage  and  overproduction,  17-19; 
social  effects,  56-8;  70-75;  versus 
efficiency,  32-6. 

Progress,  142-7,  167-9,  185-6,  255,  307; 
conservatives  versus,  382-8;  H.  G. 
Wells'  prophecies,  371-9;  vision  of, 
3S8-90. 

Property,  basis  of  progress,  5-7;  fallacy 
of,  30;   threatened,  149-50. 

Prosperity  and  depression,  49-55. 

Public  opinion,  direct  action  and,  204-5; 
factors'influencing,  58-61;  freedom  of, 
360-64;   propaganda  and,  117-18. 

Reconstruction,  167-91,  332-4. 
Reform,  fallacies  in,  260-63;   socialism 

and,  294-8;  varieties  of,  243-56. 
Regulation,  104-15,  119-22. 
Revolution,  folly  of,  294-6;   I.  W.  W. 

and,  279-83;  unnecessary,  3-5. 
Robins,  meaning  of  the  Soviet,  299-300. 
Robinson,    James    Harvey,    The    New 

History,  382-90. 
Rockefeller,  J.  D.,  Jr.,  loo-ioi;  335-6. 
Russell,     Bertrand,     Democracy     and 

Direct  Action,    199-205;    Roads    to 

Freedom,  283,  388. 

Science,  social,  lo-ii;  conservatives 
and,  65-68;  381-88;  discipHne  of, 
380-82;  H.  G.  Wells  on,  371-9; 
industry  and,  371-3;  meaning  of, 
367-8;   possibilities  of,  367-90. 

Seager,  Henry  R.,  Bias  of  the  courts, 
227. 

Shop  committees,  317-21. 

Socialism,  286-98,  382;  state,  286-94; 
varieties,  287-9;   wartime,  288. 

Soviet,  299-304. 

State  interference,  104-15,  140-41,  163- 
86,  191. 

Steams,  Harold,  Neglected  Causes  of 
Fatigue,  260-63. 

Stock  ownership,  control  and,  55-7, 
71-5,  101-3;  distribution  and,  116- 
17;  good  will  and,  69-71;  invest- 
ment bankers,  122-30;  profits  and, 
7.';-6- 

Stoddard,  William  L.,  The  Shop  Com- 
mittee, 317-21. 


Strikes,  215-16;   I.  W.  W.,  277-83. 
Surplus    product,    amount    of,    141-5; 

danger  in,  38,  133;   definition,  134-7; 

export  trade  and,  30,  147-8;   hope  of 

democracy,     142-7;     taxation    and, 

155-6. 
Survey,  150,  154,305. 
Syndicalism,      264-85;      activities     in 

America,     277-83;      description    of, 

264-77;  fallacies  of,  283-5. 

Taxation,  163-5,  180-83. 

Tead,  Ordway,  People's  Part  in  Peace, 

38-44;    Whitley  Councils,  192-6. 
Teggart,  F.  J.,  Processes  of  History, 

7-11. 

Unrest,  1-15,  26,  30,  31. 
Untermyer,     Samuel,    railroad    owner- 
ship and  control,  97-98. 

Vandervelde,  Emil,  Socialism  versus 

the  State,  286-91. 
Veblen,    Thorstein,    sabotage,     15-25; 

Theory  of  Business  Enterprise,  69- 

71,  101-103. 

Wages,  91-96,  146-155,  169-70. 

Wallas,  Graham,  The  Great  Society, 
no,  243,  283,  362. 

Walsh,  Frank  P.,  living  wage,  150-41; 
responsibility  of  workers,  305-7. 

War  and  industry,  governmental  con- 
trol, 40-44;  debts,  157-61;  war  agen- 
cies, 332-4. 

War  Labor  Board,  National,  150,  218, 

305- 

Wealth,  surplus,  amount  of,  141;  dan- 
ger of,  133;  definition  of,  134-7; 
democracy,  142-7;  distribution  of, 
183-6;  taxation  and,  165-6. 

Webb,  Sidney,  Restoration  of  Trade 
Union  Conditions,  36-8. 

Wells,  H.  G.,  Discovery  of  the  Future, 
373-5;  Social  I<"orces  in  England  and 
America,  375-70. 

Weyl,  End  of  the  War,  i,  38,  147;  The 
New  Democracy,  142-46. 

Whitley  Councils,  188-95. 

Wilson,  Woodrow,  Message  to  Congress, 
307,  332;    The  New  Freedom,  350- 

"S2- 

Wood,  C.  W.,  The  Great  Change,  32- 
35- 

Zimmcrn,  A.  E.,  Nationality  and  Gov- 
ernment, 315-17. 


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